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on Cognitive and Behavioural Economics |
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Issue of 2015‒12‒28
sixteen papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale “Amedeo Avogadro” |
| By: | Da Silva, Sergio; Matsushita, Raul; Seifert, Guilherme; De Carvalho, Mateus |
| Abstract: | We administrate the cognitive reflection test devised by Frederick to a sample of 483 undergraduates and discriminate the sample to consider selected demographic characteristics. For the sake of robustness, we take two extra versions that present cues for removing the automatic (but wrong) answers suggested by the test. We find a participant’s gender and religious attitude to matter for the test performance on the three versions. Males score significantly higher than females, and so do atheists of either gender. While the former result replicates a previous finding that is now reasonably well established, the latter is new. The fact that atheists score higher agrees with the literature showing that belief is an automatic manifestation of the mind and its default mode. Disbelieving seems to require deliberative cognitive ability. Such results are verified by an extra sample of 81 participants using Google Docs questionnaires via the Internet. |
| Keywords: | Cognitive Reflection, Religiosity, Atheism, Cognitive Psychology |
| JEL: | Y80 Z12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68451&r=cbe |
| By: | Isabel Busom; Cristina Lopez-Mayan |
| Abstract: | Economic views held by the general public tend to differ significantly from those of economic experts. To what extent would these differences fade away if people were exposed to economic instruction? In this paper we identify first-year college students? initial preconceptions about economic issues, explore some cognitive biases behind them, verify their persistence, and test whether beliefs are correlated to course performance. We conduct a survey at the beginning and the end of the semester on a sample of students taking an economic principles course. We find evidence of preconception persistence, inconsistencies and self-serving bias. Most students do not incorporate the newly learned tools into their thinking process, even if they perform well. Many economics senior students have some beliefs that are contradicted in a principles course. Instruction in economics could be more efficient if it explicitly addressed students? preconceptions and biases, a path already taken in other disciplines. |
| Keywords: | Economic education; student beliefs; cognitive bias; psychology; teaching of economics |
| JEL: | A12 A20 I21 Y8 |
| Date: | 2015–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:959.15&r=cbe |
| By: | Driesen B.W.I.; Lombardi M.; Peters H.J.M. (GSBE) |
| Abstract: | We study feasible sets of the bargaining problem under two different assumptions the players are subjective expected utility maximizers or the players are Choquet expected utility maximizers. For the latter case, we consider the effects on bargaining solutions when players become more risk averse and when they become more uncertainty averse. |
| Keywords: | Bargaining Theory; Matching Theory; Criteria for Decision-Making under Risk and Uncertainty; |
| JEL: | C78 D81 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2015031&r=cbe |
| By: | Avner Ben-Ner; John A. List; Louis Putterman; Anya Samek |
| Abstract: | An active area of research within the social sciences concerns the underlying motivation for sharing scarce resources and engaging in other pro-social actions. We develop a theoretical framework that sheds light on the developmental origins of social preferences by providing mechanisms through which parents transmit preferences for generosity to their children. Then, we conduct a field experiment with nearly 150 3-5 year old children and their parents, measuring (1) whether child and parent generosity is correlated, (2) whether children are influenced by their parents when making sharing decisions and (3) whether parents model generosity to children. We observe no correlation of independently measured parent and child sharing decisions at this young age. Yet, we find that apart from those choosing an equal allocation of resources between themselves and another child, children adjust their behaviors to narrow the gap with their parent’s or other adult’s choice. We find that fathers, and parents of initially generous children, increase their sharing when informed that their child will be shown their choice. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:bro:econwp:2015-12&r=cbe |
| By: | Daniele Nosenzo (Department of Economics, University of Nottingham.); Fabio Tufano (Department of Economics, University of Nottingham.) |
| Abstract: | We study the effects of voluntary participation on cooperation in collective action problems. Voluntary participation may foster cooperation through an entry mechanism, which leads to assortative selection of interaction partners, or an exit mechanism, whereby the opportunity to leave the partnership can be used as a threat against free-riders. We examine the effectiveness of these mechanisms in a one-shot public goods experiment. Voluntary participation has a positive effect on provision only through the exit mechanism. Assortative selection of interaction partners seems to play a minor role in our setting, whereas the threat of costly exit is a powerful force to discipline free-riding. |
| Keywords: | public goods; cooperation; voluntary participation; exit; entry; experiment |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-20&r=cbe |
| By: | A Banerji and Jeevant Rampal (Centre for Development Economics, Delhi School of Economics, University of Delhi, India) |
| Abstract: | This paper reports and models the discrepancy between the full bidding and endow and upgrade findings from a willingness-to-pay (WTP) elicitation Becker-Degroot-Marschak (BDM) experiment for an improved food, conducted in rural India. We found that the distribution of the WTP for exchanging 1kg local pearl millet (LPM) for 1 kg of biofortified high-iron pearl millet (HIPM) first-order stochastically dominated the distribution of the difference between the WTPs for 1kg HIPM and 1kg LPM. Thus the data (i) rejects preferences that are standard or have status quo reference points, in favor of an expectations-based reference dependence model of loss aversion for the new product, and (ii) is used to identify and estimate the loss aversion parameter and latent consumer valuations for HIPM in the consumer model. These point to a significant downward bias in conventional WTP estimates Of HIPM using the BDM procedure, suggesting caution when one is using standard incentive compatible mechanisms for value elicitation. |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:249&r=cbe |
| By: | Sieber, Susann; Schmidt, Tobias |
| Abstract: | In this paper, we analyse the recording behaviour of German consumers in a one week diary on their point-of-sales expenditures. We are particularly interested in the effect of a behavioural experiment, eliciting respondents' risk preferences, on their recording behaviour. In the experiment, run shortly before the consumers start to fill in the diary, the consumers have the choice between receiving a sure payment of 10 euro and participating in a game. If they opt for playing the game they roll a die and either win 20 euro or nothing. We ask whether respondents' recording behaviour differs depending on whether individuals who do roll the die lose or win. We argue that winners may attach a more positive feeling to the survey than losers and therefore exhibit more commitment to the diary, e.g. by reporting better quality data. Beyond providing evidence on the effect of conducting up-front experiments in representative surveys our results also contribute to the literature on incentives. For participants who roll the die, the experiment can be seen as a tool to randomly assign an incentive to respondents. Our results indicate that the outcome of the game has an impact on the quantity of transactions recorded, but does not affect other aspects of data quality. It also has a negligible impact on substantive measures like the cash share. |
| Keywords: | incentives,risk experiments,payment diary,data quality |
| JEL: | C83 D12 E41 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:432015&r=cbe |
| By: | Sauter, Philipp; Hermann, Daniel; Mußhoff, Oliver |
| Abstract: | Many economic decision situations of foresters and farmers are characterized by risk. Thereby, the individual risk attitude is of particular interest for understanding decision behaviour and, thus, is fundamental for valuable policy recommendations. The literature provides various methods to measure risk attitude, however, their respective suitability has not been sufficiently tested. Furthermore, existing analyses focus mostly on students and the field of resource economics for farmers. However, there is a lack of knowledge regarding the risk attitude of foresters and how it compares to farmers and students' attitudes. Therefore, we investigate to what extent results are comparable across different methods and whether the risk attitude of foresters differs from that of farmers and forestry students. To analyse this issue, we conduct an incentivized online experiment using the Holt and Laury (HL) task, the Eckel and Grossman (EG) task and a self-assessment (SA) questionnaire. As a result, SA values do not correlate with the HL values, but the EG values correlate with the HL values across all groups, although, risk-aversion coefficients differ. According to the HL task and the EG task, we reveal higher risk aversion for foresters in comparison to farmers, while forestry students do not differ from foresters. |
| Keywords: | risk attitude,foresters,farmers,Holt and Laury task,Eckel and Grossman task,self-assessment of risk attitude |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:daredp:1514&r=cbe |
| By: | Andrew Mell |
| Abstract: | Abstract: A rational long lived player plays against a series of short lived players who use a variant of the Adaptive Play behavioral rule. In equilibrium, under certain conditions, there will be a cut-off level of reputation. If their reputation is below the cut-off, they will build their reputation, and consume out of their reputation if it is above the cut-off. Over the long run, their reputation oscillates around the cut-off. A public relations professional can manipulate the sampling of the short lived players to the benefit of the long lived player. As a result a patient long lived player's behavior will worsen while an impatient long lived player's behavior will improve. |
| Keywords: | Reputation, Adaptive Play, Monitoring, Expectation Formation |
| JEL: | D82 D83 D84 |
| Date: | 2015–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:770&r=cbe |
| By: | Stephen V. Burks (Division of Social Science, University of Minnesota, Institute for the Study of Labor, Centre for Decision Research and Experimental Economics (CeDEx), University of Nottingham); Daniele Nosenzo (Department of Economics, University of Nottingham.); Jon Anderson (Division of Science and Mathematics, University of Minnesota); Matthew Bombyk (Innovations for Poverty Action); Derek Ganzhorn (Northwestern University School of Law); Lorenz Goette (Institute for the Study of Labor, Department of Economics, University of Minnesota); Aldo Rustichini (Northwestern University School of Law, University of Bonn, Institute for Applied Microeconomics) |
| Abstract: | We measure a specific form of other-regarding behavior, costly cooperation with an anonymous other, among 645 subjects at a trucker training program in the Midwestern US. Using a sequential, strategic form of the Prisoners’ Dilemma, we categorize subjects as: Free Rider, Conditional Cooperator, and Unconditional Cooperator. We observe the subjects on the job for up to two years afterwards in two naturally-occurring choices—whether to send two types of satellite uplink messages from their trucks. The first identifies trailers requiring repair, which benefits fellow drivers, while the second benefits the experimenters by giving them some followup data. Because of the specific nature of the technology and job conditions (which we carefully review) each of these otherwise situationally similar field decisions represents an act of costly cooperation towards an anonymous other in a setting that does not admit of repeated-game or reputation-effect explanations. We find that individual differences in costly cooperation observed in the lab do predict individual differences in the field in the first choice but not the second. We suggest that this difference is linked to the difference in the social identities of the beneficiaries (fellow drivers versus experimenters), and we conjecture that whether or not individual variations in pro-sociality generalize across settings (whether in the lab or field) may depend in part on this specific contextual factor: whether the social identities, and the relevant prescriptions (or norms) linked to them that are salient for subjects (as in Akerlof and Kranton (2000); (2010)), are appropriately parallel. |
| Keywords: | experiments; generalizability; external validity; parallelism; social identity; otherregarding behavior; costly cooperation, social preferences; prisoners’ dilemma; trucker; truckload |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-21&r=cbe |
| By: | John Gathergood; Joerg Weber |
| Abstract: | The decision to buy a home is one of the most important choices faced by a household. Most households who purchase a home do so using a mortgage. But mortgages are complex financial instruments and this complexity may be a barrier to less sophisticated households becoming homeowners. Using survey data from a sample of English and Welsh households we measure household financial literacy related to mortgages, including concepts such as loan duration, interest compounding and amortization. We also measure time preference and risk attitude. We find that in the population mortgage financial literacy is generally low, as on average only two out of four questions are answered correctly. Among renters, mortgage financial literacy is substantially worse than among homeowners and this difference is not explained by socio-economic factors. Econometric estimates suggest mortgage financial literacy predicts home ownership, but instrumental variable estimates show that mortgage financial literacy is acquired endogenously with housing tenure choices. |
| Keywords: | home ownership, financial literacy, mortgage |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:15/16&r=cbe |
| By: | Maria De Paola; Vincenzo Scoppa (Dipartimento di Economia, Statistica e Finanza, Università della Calabria) |
| Abstract: | Using data on about 35,000 professional tennis matches, we test whether men and women react differently to psychological pressure arising from the outcomes of sequential stages in a competition. We show that, with respect to males, females losing the first set are much more likely to play poorly the second set, choking under the pressure of falling behind and receiving negative feedback. The gender differential is stronger in high stakes matches. On the other hand, when players are tied in the third set we do not find any gender difference in players’ reactions: this suggests that females do not tend to choke if they do not lag behind. These results are robust controlling for measures of abilities and fitness of players, such as players’ rankings, players’ ex-ante winning probability, players’ rest, players’ and tournaments’ fixed effects. |
| Keywords: | Gender Differences, Psychological Pressure, Choking under Pressure, Feedback, Tennis |
| JEL: | J16 D03 L83 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:clb:wpaper:201506&r=cbe |
| By: | B. Douglas Bernheim (Stanford University); Christine L. Exley (Harvard Business School, Negotiation, Organizations & Markets Unit) |
| Abstract: | Some theories of conformity hold that social equilibrium either standardizes inferences or promotes a shared understanding of conventions and norms among individuals with fixed heterogeneous preferences (belief mechanisms). Others depict tastes as fluid and hence subject to social influences (preference mechanisms). Belief mechanisms dominate discussions of conformity within economics, but preference mechanisms receive significant attention in other social sciences. This paper seeks to determine whether conformity is attributable to belief mechanisms or preference mechanisms by exploiting their distinctive implications for the process of convergence. Laboratory experiments suggest that economists have focused too narrowly on explanations for conformity involving belief mechanisms. |
| Keywords: | conformity, norms, image motivation, prosocial behavior, |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:16-070&r=cbe |
| By: | Louis Lévy-Garboua (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Claude Montmarquette (CIRANO - Centre Interuniversitaire de Recherche en ANalyse des Organisations); Jonathan Vaksmann (UM - Université du Maine); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We study mutual-aid games in which individuals choose to contribute to an informal mutual insurance pool. Individual coverage is determined by the aggregate level of contributions and a sharing rule. We analyze theoretically and experimentally the (ex ante) efficiency of equal and contribution-based coverage. The equal coverage mechanism leads to a unique no-insurance equilibrium while contribution-based coverage develops multiple equilibria and improves efficiency. Experimentally, the latter treatment reduces the amount of transfers from high contributors to low contributors and generates a "dual interior equilibrium". That dual equilibrium is consistent with the coexistence of different prior norms which correspond to notable equilibria derived in the theory. This results in asymmetric outcomes with a majority of high contributors less than fully reimbursing the global losses and a signi cant minority of low contributors less than fully defecting. Such behavioral heterogeneity may be attributed to risk attitudes (risk tolerance vs risk aversion) which is natural in a risky context. |
| Keywords: | Mutual insurance pool, voluntary contribution mechanism, equal coverage, contribution-based coverage, heterogeneity of risk attitudes, experiment |
| Date: | 2015–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01243256&r=cbe |
| By: | Barone, Adriana; Nese, Annamaria |
| Abstract: | This study examines the relationship between body weight and academic choice and performance, focusing on gender differences and using survey data from students at the University of Salerno in Italy.Our findings indicate a significant negative relationship between body weight and academic performance,particularly for female students.In our examination of BMI and field of study (i.e.,science vs.the humanities),our results indicate that overweight/obese females are less likely than those of average weight to pursue scientific studies, and hence, more remunerative careers.The asymmetry of the findings between males and females suggests that during late adolescence physicality plays different roles according to gender. |
| Keywords: | Human capital; Body weight; Educational economics; Microeconometrics |
| JEL: | C25 D01 I12 I21 J24 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68450&r=cbe |
| By: | Zinaida M. Pogosova (National Research University Higher School of Economics); M Nizhnik (National Research University Higher School of Economics); Henry Penikas (National Research University Higher School of Economics) |
| Abstract: | The “ignorance of law” defense is often used as an argument to decrease the degree of punishment assigned to a convicted criminal. Previous research has identified that the degree of punishment is, inter alia, impacted by the perceived morality of the action and the convicted criminal’s knowledge of the law. Compared to previous findings, the current paper contributes to the field of study in three principal ways. First, it analyzes Russian respondents and their perceptions of morality of action (previous studies have dealt with American respondents). Second, the present paper traces the distinction between lawyers’ perceptions and those of laypeople. Third, the quantitative impact of the ignorance of law defense on a trial group is traced by considering the interrelationship of factors determining the ultimate degree of punishment a hypothetical criminal would be sentenced to. |
| Keywords: | public opinion, policy-making, penal policy, punishment theory, just deserts, deterrence, consequentialism, utilitarianism, ignorance of law defense, morality perception, probit. |
| JEL: | K42 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:56/law/2015&r=cbe |