nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2016‒02‒17
thirteen papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Cooperation at a discount - Will I give away your money? By Lohse, Johannes
  2. Sleep Restriction and Time‐of‐Day Impacts on Simple Social Interaction By Dickinson, David L.; McElroy, Todd
  3. Prevalence and Determinants of Choice Bracketing - Experimental Evidence By Stracke, Rudi; Kerschbamer, Rudolf; Sunde, Uwe
  4. Why Do Women Favor In-group Competition? Evidence From an Incentive Compatible Choice Experiment By Schmitt, Norma; Beblo, Miriam; Beninger, Denis; Schröder, Melanie
  5. Surprising Gifts: Theory and Laboratory Evidence By Werner, Peter; Khalmetski, Kiryl; Ockenfels, Axel
  6. Do Taxes Crowd Out Intrinsic Motivation? Field-Experimental Evidence from Germany By Rincke, Johannes; Boyer, Pierre; Dwenger, Nadja
  7. Religion, Discrimination and Trust By Chuah, Swee Hoon; Gächter, Simon; Hoffmann, Robert; Tan, Jonathan H. W.
  8. Defaults and Donations: Evidence from a Field Experiment By Altmann, Steffen; Falk, Armin; Heidhues, Paul; Jayaraman, Rajshri
  9. The Importance of Peers for Compliance with Norms of Fair Sharing By Gächter, Simon; Gerhards, Leonie; Nosenzo, Daniele
  10. Expectation-Based Loss Aversion and Strategic Interaction By Dato, Simon; Müller, Daniel; Grunewald, Andreas
  11. How does education improve cognitive skills? Instructional Time versus Timing of Instruction By Dahmann, Sarah
  12. Attention and Endogenous Framing By Dertwinkel-Kalt, Markus; Wenzel, Tobias
  13. The Preference Survey Module: A Validated Instrument for Measuring Risk, Time, and Social Preferences By Falk, Armin; Becker, Anke; Dohmen, Thomas; Huffman, David B.; Sunde, Uwe

  1. By: Lohse, Johannes
    Abstract: Will individuals contribute to a public good, even if doing so imposes a negative externality on an outsider? This paper describes the results of an experiment in which decision makers could contribute to a real public good, while (part of) the contribution costs were passed on to another participant. Decision makers with social preferences thus faced lower contribution cost but had to take into account additional costs imposed on an outsider. Such trade-offs are pervasive in many public good decisions, in which those who decide about provision, those who finance provision and those who benefit from it are different actors. My findings suggest that decision makers, at large, ignored adverse effects imposed on another participant. When varying both the distribution of initial endowments and the fraction of costs passed on to the outsider, I find that decision makers only refrain from contributing if the outsider has to pay for a disproportionate share or the full provision costs. This finding is best explained by advantageous inequity aversion.
    JEL: H41 C92 H23
    Date: 2015
  2. By: Dickinson, David L. (Appalachian State University); McElroy, Todd (Florida Gulf Coast University)
    Abstract: Simple bargaining games are the foundation of more complex social interactions necessary for healthy relationships and well‐functioning societies. Neuroscience research has shown that high‐level deliberative thinking processes are necessary for social‐decision making - it seems cognitively less demanding to be greedy or to mistrust. In this paper, our focus is on how commonly‐experienced adverse sleep states, which are known to harm deliberative thinking, impact outcomes in the classic simple bargaining games (ultimatum, dictator, and trust games). Specifically, we experimentally manipulate sleep states of 184 young‐adult subjects who took part in a 3 week experimental protocol. Subjects were administered each game twice: once after a full week of sleep restriction and once after a full week of well‐rested sleep levels. Subjects were also randomly assigned to early morning (7:30 am) or later evening (10:00 pm) sessions to manipulate the optimality of the time‐of‐day of the decisions. We find a robust result of increased greed, reduced trust, and reduced trustworthiness following sleep restriction, after controlling for demographics and session indicators. We find no significant direct impact of circadian timing on decisions for these tasks. However, the mediating variable for these sleep manipulation effects is subjective sleepiness, and both sleep restriction and suboptimal circadian timing significantly increase self‐reported sleepiness. These results are consistent with the hypothesis that increased sleepiness reduces the relative input of deliberate thinking in social interactions.
    Keywords: sleep, time-of-day, ultimatum, dictator, trust, bargaining
    JEL: C7 C9
    Date: 2016–01
  3. By: Stracke, Rudi; Kerschbamer, Rudolf; Sunde, Uwe
    Abstract: This paper investigates whether the timing of rewards affects behavior in multi-stage contests. Abstracting from discounting, theory predicts that it is irrelevant for behavior whether agents are immediately rewarded for succeeding on a particular stage, or whether the reward is delayed until the interaction on the subsequent stage is decided. When testing this prediction using a two-stage contest in lab experiments, we fnd that stage-2 efforts are identical in immediate and delayed reward treatments, while stage-1 effort is significantly lower if rewards are immediate. This difference can be explained by the salience of continuation values, which is strongly affected by the timing of rewards.
    JEL: C72 M52 J33
    Date: 2015
  4. By: Schmitt, Norma; Beblo, Miriam; Beninger, Denis; Schröder, Melanie
    Abstract: This paper identifies a woman's self-confidence to boost her competition willingness independently from the gender-mix of the competitor's group. We conduct an incentive compatible online choice experiment with 883 non-standard subjects, 442 of them female, with competition-free and competition-involving choice sets that ruled inter alia the gender-related composition of the competitors group. Our framed field experimental setting demonstrates that indeed the participating women are more eager to engage in same-gender than in mixed-gender competition. However, if a woman is revealed to be self-confident, she is more engaged in competition even against a mixed-gender group with gender-differences in competition disappearing. Our interpretation is twofold: On the one hand, we confirm a woman's competition ability, whereas on the other, we must admit that this is driven by the strength of her self-concept.
    JEL: C93 D83 J16
    Date: 2015
  5. By: Werner, Peter; Khalmetski, Kiryl; Ockenfels, Axel
    Abstract: People do not only feel guilt from not living up to others expectations (Battigalli and Dufwenberg (2007)), but may also like to exceed them. We propose a model that generalizes the guilt aversion model to capture the possibility of positive surprises when making gifts. A model extension allows decision makers to care about others' attribution of intentions behind surprises. We test the model in two dictator game experiments. Experiment 1 shows a strong causal effect of recipients expectations on dictators transfers. Moreover, in line with our model, the correlation between transfers and expectations can be both, positive and negative, obscuring the effect in the aggregate. Experiment 2 shows that dictators care about what recipients know about the intentions behind surprises.
    JEL: C91 D64 D84
    Date: 2015
  6. By: Rincke, Johannes; Boyer, Pierre; Dwenger, Nadja
    Abstract: This paper studies how imposing norms on contribution behavior affects individuals' intrinsic motivation. We consider an urban area in Germany where the Catholic Church collects a local church levy as a charitable donation, despite the fact that the levy is legally a tax. In cooperation with the church, we design a natural randomized field experiment with letter treatments informing individuals that the church levy is in fact a tax. Guided by a simple theoretical model, we use baseline contribution behavior to measure individuals' intrinsic motivation and demonstrate that treatment effects differ strongly across motivational types. Among weakly intrinsically motivated individuals, communicating the existence of a legal norm results in a significant crowd-out of intrinsic motivation. In contrast, strongly intrinsically motivated individuals do not show any treatment response. We cross-validate our findings using alternative motivational measures derived from an extensive post-treatment survey.
    JEL: C93 D03 H26
    Date: 2015
  7. By: Chuah, Swee Hoon (RMIT University); Gächter, Simon (University of Nottingham); Hoffmann, Robert (RMIT University); Tan, Jonathan H. W. (University of Nottingham)
    Abstract: We propose that religion impacts trust and trustworthiness in ways that depend on how individuals are socially identified and connected. Religiosity and religious affiliation may serve as markers for statistical discrimination. Further, affiliation to the same religion may enhance group identity, or affiliation irrespective of creed may lend social identity, and in turn induce taste-based discrimination. Religiosity may also relate to general prejudice. We test these hypotheses across three culturally diverse countries. Participants' willingness to discriminate, beliefs of how trustworthy or trusting others are, as well as actual trust and trustworthiness are measured incentive compatibly. We find that interpersonal similarity in religiosity and affiliation promote trust through beliefs of reciprocity. Religious participants also believe that those belonging to some faith are trustworthier, but invest more trust only in those of the same religion – religiosity amplifies this effect. Across non-religious categories, whereas more religious participants are more willing to discriminate, less religious participants are as likely to display group biases.
    Keywords: religiosity, connectedness, discrimination, trust, experiment
    JEL: C72 C91 J16 Z12
    Date: 2015–12
  8. By: Altmann, Steffen; Falk, Armin; Heidhues, Paul; Jayaraman, Rajshri
    Abstract: We study how website defaults aff ect consumer behavior in the domain of charitable giving. In a field experiment that was conducted on a large platform for making charitable donations over the web, we exogenously vary the default options in two distinct choice dimensions. The first pertains to the primary donation decision, namely, how much to contribute to the charitable cause. The second relates to an "add-on" decision of how much to contribute to supporting the online platform itself. We find a strong impact of defaults on individual behavior: in each of our treatments, the modal positive contributions in both choice dimensions invariably correspond to the speci ed default amounts. Defaults, nevertheless, have no impact on aggregate donations. This is because defaults in the donation domain induce some people to donate more and others to donate less than they otherwise would have. In contrast, higher defaults in the secondary choice dimension unambiguously induce higher contributions to the online platform.
    JEL: C93 D03 D64
    Date: 2015
  9. By: Gächter, Simon (University of Nottingham); Gerhards, Leonie (University of Hamburg); Nosenzo, Daniele (University of Nottingham)
    Abstract: A burgeoning literature in economics has started examining the role of social norms in explaining economic behavior. Surprisingly, the vast majority of this literature has studied social norms in asocial decision settings, where individuals are observed to act in isolation from each other. In this paper we use a large-scale dictator game experiment (N = 850) to show that the presence of "peers" in the decision setting faced by an individual can have a profound influence on the individual's perception of the decision situation and its underlying norms of sharing, as elicited in an incentive compatible way. However, we find limited evidence that this influence of peers in normative considerations translates into a corresponding effect in actual behavior. Partly, this is due to substantial heterogeneity in the extent to which dictators in our sample are willing to comply with norms of fair sharing.
    Keywords: social norms, norm compliance, peer effects, fair sharing, dictator game, framing, experiments
    JEL: A13 C92 D03
    Date: 2015–12
  10. By: Dato, Simon; Müller, Daniel; Grunewald, Andreas
    Abstract: This paper provides a comprehensive analysis regarding strategic interaction under expectation-based loss-aversion. First, we develop a coherent framework for the analysis by extending the equilibrium concepts of K szegi and Rabin (2006, 2007) to strategic interaction and demonstrate how to derive equilibria. Second, we delineate how expectation-based loss-averse players differ in their strategic behavior from their counterparts with standard expected-utility preferences. Third, we analyze equilibrium play under expectation-based loss aversion and comment on the existence of equilibria.
    JEL: C72 D03 D81
    Date: 2015
  11. By: Dahmann, Sarah
    Abstract: This paper investigates two mechanisms through which education may affect cognitive skills in adolescence: the role of instructional quantity and the timing of instruction with respect to age. To identify causal effects, I exploit a school reform carried out at the state level in Germany as a quasi-natural experiment: between 2001 and 2007, academic-track high school (Gymnasium) was reduced by one year in most of Germany's federal states, leaving the overall curriculum unchanged. To investigate the impact of this educational change on students' cognitive abilities, I conduct two separate analyses: first, I exploit the variation in the curriculum taught to same-aged students at academic-track high school over time and across states to identify the effect of the increase in instructional time on students' crystallized and fluid intelligence scores. Using rich data on seventeen year-old adolescents from the German Socio-Economic Panel (SOEP) study, the estimates show that fluid intelligence remained unaffected, while crystallized intelligence improved for male students. Second, I compare students' competences in their final year of high school using data from the German National Educational Panel Study (NEPS). Preliminary results suggest that students affected by the reform catch up with their non-affected counterparts in terms of their competences by the time of graduation. However, they do not provide any evidence for the timing of instruction to matter in cognitive skill formation. Overall, secondary education therefore seems to impact students' cognitive skills in adolescence especially through instructional time and not so much through age-distinct timing of instruction.
    JEL: I21 I28 J24
    Date: 2015
  12. By: Dertwinkel-Kalt, Markus; Wenzel, Tobias
    Abstract: This paper develops a theory of framing in an intertemporal context with risky choices. We provide a unifying account of existing theories of focusing by allowing a decision maker to choose her frame such that her attention is either drawn to salient events associated with an option or to the expected utilities an option yields in different time periods. Our key assumption is that a decision maker can choose her frame in a self-serving manner. We predict that the selected frame induces overoptimistic actions in the sense that subjects underrate risk but overrate chances and accordingly reveal overoptimistic actions. Hence, our theory can explain phenomena such as excessive harmful consumption (smoking, unhealthy diet) and risky investments (enterpreneurship, lotteries, gambling). We also apply our theory to static lotteries and find that classical phenomena of decision making under risk (such as the Common Ratio Allais paradox) can be rationalized by our model. We provide experimental evidence to support our claims.
    JEL: D03 D11 D90
    Date: 2015
  13. By: Falk, Armin (University of Bonn); Becker, Anke (University of Bonn); Dohmen, Thomas (University of Bonn); Huffman, David B. (University of Pittsburgh); Sunde, Uwe (University of Munich)
    Abstract: This paper presents an experimentally validated survey module to measure six key economic preferences – risk aversion, discounting, trust, altruism, positive and negative reciprocity – in a reliable, parsimonious and cost-effective way. The survey instruments included in the module were the best predictors of preferences revealed in incentivized choice experiments. We also offer a streamlined version of the module that has been optimized and piloted for applications where time efficiency and simplicity are paramount, such as international telephone surveys.
    Keywords: survey validation, experiment, preference measurement
    JEL: C81 C83 C90
    Date: 2016–01

This nep-cbe issue is ©2016 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.