nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2015‒12‒12
nine papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Entrepreneurial behavior in organizations: does job design matter? By Jeroen P. J. De Jong; Sharon K. Parker; Sander Wennekers; Chia-Huei Wu
  2. Religious fragmentation, social identity and rent-seeking: Evidence from an artefactual field experiment in India By Surajeet Chakravarty; Miguel A. Fonseca; Sudeep Ghosh; Sugata Marjit
  3. Status and the Demand for Visible Goods: Experimental Evidence on Conspicuous Consumption By David Clingingsmith; Roman M. Sheremeta
  4. Don't Blame the Messenger: A Field Experiment on Delivery Methods for Increasing Tax Compliance By Daniel Ortega; Carlos Scartascini
  5. A Game-Theoreteic Analysis of Minority Language Use in Multilingual Societies By Uriarte Ayo, José Ramón
  6. Nudging the Self-employed into Contributing to Social Security: Evidence from a Nationwide Quasi Experiment in Brazil By Juan Miguel Villa; Danilo Fernandes; Mariano Bosch
  7. An experimental study of sorting in group contests By Philip Brookins; John P. Lightle; Dmitry Ryvkin
  8. Since you’re so rich, you must be really smart”: Talent and the Finance Wage Premium By Böhm, Michael; Metzger, Daniel; Strömberg, Per
  9. Higher Intelligence Groups Have Higher Cooperation Rates in the Repeated Prisoner's Dilemma By Proto, Eugenio; Rustichini, Aldo; Sofianos, Andis

  1. By: Jeroen P. J. De Jong; Sharon K. Parker; Sander Wennekers; Chia-Huei Wu
    Abstract: We take a first step to explore how organizational factors influence individual entrepreneurial behavior at work, by investigating the role of job design variables. Drawing on multiple-source survey data of 179 workers in a Dutch research and consultancy organization, we find that entrepreneurial behavior, indicated by innovation, proactivity, and risk-taking items, is a higher order construct. Job autonomy is positively related with entrepreneurial behavior, as well as its innovation and proactivity subdimensions, while job variety is not. This suggests that interventions related to the vertical scope of jobs will promote entrepreneurial behaviors more than horizontal job expansion
    JEL: R14 J01
    Date: 2015
  2. By: Surajeet Chakravarty (Department of Economics, University of Exeter); Miguel A. Fonseca (Department of Economics, University of Exeter); Sudeep Ghosh (Hong Kong Polytechnic University); Sugata Marjit (DCenter for Studies in the Social Sciences, Calcutta)
    Abstract: We examine the impact of religious identity and village-level religious fragmentation on rent seeking behavior. We report on a series of two-player Tullock contest experiments conducted on a sample of 516 Hindu and Muslim participants in rural West Bengal, India. Our treatments are the identity of the two players and the degree of religious fragmentation in the village where subjects reside. We find no statistically significant differences in rent seeking behavior across different villages. We also do not find any significant differences in behavior as a function of players' identities. This is in contrast to evidence from the same sample which recorded significant differences in cooperation levels in prisoners' dilemma and stag hunt games. We attribute this to the fact that social identity may have a more powerful effect on cooperation than on confl ict.
    Keywords: Social Identity, Social Fragmentation, Artefactual Field Experiment, Rent Seeking.
    JEL: C93 D03 H41
    Date: 2015
  3. By: David Clingingsmith (Weatherhead School of Management, Case Western Reserve University); Roman M. Sheremeta (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University)
    Abstract: Some economists argue that consumption of publicly visible goods is driven by social status. Making a causal inference about this claim is difficult with observational data. We conduct an experiment in which we vary both whether a purchase of a physical product is publicly visible or kept private and whether the income used for purchase is linked to social status or randomly assigned. Making consumption choices visible leads to a large increase in demand when income is linked to status, but not otherwise. We investigate the characteristics that mediate this effect and estimate its impact on welfare.
    Keywords: status, conspicuous consumption, experiment
    JEL: C91 D03
    Date: 2015
  4. By: Daniel Ortega; Carlos Scartascini
    Abstract: There is an ample literature on the determinants of tax compliance. Several field experiments have evaluated the effect and comparative relevance of sending deterrence and moral suasion messages to taxpayers. The effect of different delivery mechanisms, however, has not been evaluated so far. This study conducts a field experiment in Colombia that varies the way the National Tax Agency contacts taxpayers on payments due for income, value added, and wealth taxes. More than 20,000 taxpayers were randomly assigned to a control or one of three delivery mechanisms (letter, email, and personal visit by a tax inspector). Results indicate large and highly significant effects, as well as sizable differences across delivery methods. A personal visit by a tax inspector is more effective than a physical letter or an email, conditional on delivery, but email tends to reach its target more often. Improving the quality of taxpayer contact information can significantly improve the collection of delinquencies.
    Keywords: Taxation, Development Banks, Tax evasion, Tax compliance, Tax compliance, Field experiments, Delivery methods, Optimal enforcement strategies, Public policy, IDB-WP-627
    Date: 2015–11
  5. By: Uriarte Ayo, José Ramón
    Abstract: This chapter studies multilingual democratic societies with highly developed economies. These societies are assumed to have two languages with official status: language A, spoken by every individual, and language B, spoken by the bilingual minority. We emphasize that language rights are important, but the survival of the minority language B depends mainly on the actual use bilinguals make of B. The purpose of the present chapter is to study some of the factors affecting the bilingual speakers language choice behaviour. Our view is that languages with their speech communities compete for speakers just as fi rms compete for market share. Thus, the con ict among the minority languages in these societies does not take the rough expressions such as those studied in Desmet et al. (2012). Here the con flict is more subtle. We model highly plausible language choice situations by means of choice procedures and non-cooperative games, each with different types of information. We then study the determinants of the bilinguals ' strategic behaviour with regard to language. We observe that the bilinguals' use of B is shaped, essentially, by linguistic conventions and social norms that are developed in situations of language contact.
    Keywords: minority, language, contact, information, politeness, equilibrium, competition, evolutionary, stability, imperfect
    JEL: C72 Z10
    Date: 2015–10
  6. By: Juan Miguel Villa; Danilo Fernandes; Mariano Bosch
    Abstract: This paper studies the first large scale effort by the Brazilian government to increase the social security compliance of self-employed workers using behavioral interventions. In 2014, the Brazilian Ministry of Social Security gradually delivered by postal mail a booklet reminding nearly 3 million self-employed workers their obligation to contribute to social security. We find that, sending the booklet increased payments by 15 percent and compliance rates by 7 percentage points. This increase is concentrated around the month the booklet was delivered and disappears three months after the intervention, a pattern known as action and backsliding. The relatively brief increase in payments outweighs the cost of sending the booklet by at least a factor of 2. Our results suggest that active behavioral interventions could be used as policy instruments that are orders of magnitude more cost-effective than subsides to increase social security contributions in developing countries, particularly for the self-employed.
    Keywords: Pension funds, Tax evasion, Social Security, Social Security, Employability
    Date: 2015–11
  7. By: Philip Brookins (Department of Economics, Florida State University); John P. Lightle (Department of Economics, Virginia Commonwealth University); Dmitry Ryvkin (Department of Economics, Florida State University)
    Abstract: We experimentally explore the effects of sorting and communication in lottery contests between groups of heterogeneous players whose within-group efforts are perfect complements. Subjects are assigned a type -- A, B, C or D -- that determines their cost of effort, with A having the lowest cost and D the highest cost, and are then assigned to one of the two two-player groups competing in the contest. Theory predicts that aggregate contest output increases in the variation in abilities between groups, i.e., the output is maximized by the most unbalanced sorting of players into groups -- (A,B) vs. (C,D) -- and minimized by the most balanced sorting -- (A,D) vs. (B,C). That is, the equilibrium prediction goes against the "competitive balance" heuristic. In the absence of communication, this prediction is directionally confirmed, although the effect is not statistically significant. In the presence of within-group communication, however, we find that total output is 33% higher under the balanced sorting as compared to the unbalanced sorting -- a reversal of the prediction, but in line with the heuristic. This result is driven by an increase in output by (B,C) groups under the balanced sorting and a strong decrease in output by the underdog (C,D) groups under the unbalanced sorting, relative to no communication. These results are at odds with previous studies that find that within-group communication always increases output, and suggest that the effect of communication depends strongly on the configuration of heterogeneity between and within groups. Competitive balance is confirmed as a robust sorting heuristic for sustaining competition and high effort provision in group contests.
    Keywords: group contest, sorting, complementarity, heterogeneous players, experiment
    JEL: C72 C91 D72 M54
    Date: 2015–12
  8. By: Böhm, Michael (University of Bonn); Metzger, Daniel (Stockholm School of Economics); Strömberg, Per (SIFR)
    Abstract: Relative pay in the financial sector has experienced an extraordinary increase over the last few decades. A proposed explanation for this pattern has been that the demand for skilled workers in finance has risen more than in other sectors. We use Swedish administrative data, which include detailed cognitive and non-cognitive test scores as well as performance in high-school and university, to examine the implications of this hypothesis for talent allocation and relative wages in the financial sector. We find no evidence that the selection of talent into finance increased or improved, neither on average nor at the top of the talent distribution. A changing composition of talent or their returns cannot account for the surge in the finance wage premium. These findings alleviate concerns about a “brain drain” into finance at the expense of other sectors, but they also suggest that rents in finance are high, increasing, and largely unexplained.
    Keywords: Finance wage premium; talent allocation; wage inequality
    JEL: G20 J31 M52
    Date: 2015–11–01
  9. By: Proto, Eugenio (Department of Economics, University of Warwick); Rustichini, Aldo (Department of Economics, University of Minnesota); Sofianos, Andis (Department of Economics, University of Warwick)
    Abstract: Intelligence affects the social outcomes of groups. A systematic study of the link is provided in an experiment where two groups of subjects with different levels of intelligence, but otherwise similar, play a repeated prisoner's dilemma. Initial cooperation rates are similar, but increase in the groups with higher intelligence to reach almost full cooperation, while they decline in the groups with lower intelligence. Cooperation of higher intelligence subjects is payo sensitive and not automatic: in a treatment with lower continuation probability there is no difference between different intelligence groups.
    Keywords: Repeated Prisoner's Dilemma, Cooperation, Intelligence JEL Classification: C73, C91, C92, B83
    Date: 2015

This nep-cbe issue is ©2015 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.