nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2016‒03‒23
twelve papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Bringing a Natural Experiment into the Laboratory: the Measurement of Individual Risk Attitudes By Zuzana Brokesova; Cary Deck; Jana Peliova
  2. The Sensitive Nature of Social Trust to Intelligence By Oasis Kodila-Tedika; Simplice Asongu; Florentin Azia-Dimbu
  3. Teaching Practices and the Management of Student Motivation, Effort and Achievement By Gunnes, Trude; Donze, Jocelyn
  4. Gender-specific Reference-dependent Preferences in an Experimental Trust Game By Hiromasa Takahashi; Junyi Shen; Kazuhito Ogawa
  5. Cognitive Load Increases Risk Aversion By Holger Gerhardt; Guido P. Biele; Hauke R. Heekeren; Harald Uhlig
  6. Homo moralis: Personal characteristics, institutions, and moral decision-making By Deckers, Thomas; Falk, Armin; Kosse, Fabian; Szech, Nora
  7. The more, the better? The impact of instructional time on student performance By Maria A. Cattaneo; Chantal Oggenfuss; Stefan C. Wolter
  8. On the ethics of public nudging: Autonomy and Agency By Christian Schubert
  9. The not so Gentle Push: Behavioral Spillovers and Policy Instruments By Giovanna d’Adda; Valerio Capraro; Massimo Tavoni
  10. Not efficient but payoff dominant: Experimental investigations of equilibrium play in binary threshold public good games By Bolle, Friedel; Spiller, Jörg
  11. The Many Faces of Human Sociality:Uncovering the Distribution and Stability of Social Preferences By Adrian Bruhin; Ernst Fehr; Daniel Schunk
  12. Testing Psychological Forward Induction and the Updating of Beliefs in the Lost Wallet Game By Woods, Daniel; Servátka, Maroš

  1. By: Zuzana Brokesova (University of Economics in Bratislava); Cary Deck (College of Business and Public Policy University of Alaska Anchorage and Sam M. Walton College of Business, University of Arkansas and Economic Science Institute, Chapman University,); Jana Peliova (Faculty of National Economy, University of Economics in Bratislava)
    Abstract: Controlled laboratory experiments have become a generally accepted method for studying economic behavior, but there are two issues that regularly arise with such work. The first pertains to the ability to generalize experimental results outside the laboratory. While laboratory experiments are typically designed to mimic naturally occurring situations, ceteris paribus comparisons are rare. Using data from a promotional campaign by a bank and a matching laboratory experiment, we find similar patterns of risk taking behavior controlling for gender and age. The second issue pertains to the impact that the payment procedure in an experiment has on observed risk taking behavior. Specifically, we compare behavior on a risk taking task where that is the only task and payment is assured, where it is one of several similar tasks of which one will be randomly selected for payment, and where it is the only task but there is only a small probability of receiving payment. We find similar behavior across these three payment procedures.
    Keywords: Natural Experiment, Laboratory Experiment, Experimental Methodology, Risk Attitudes
    JEL: C91 C99 D81
    Date: 2016
  2. By: Oasis Kodila-Tedika (Université de Kinshasa Département d’Eco); Simplice Asongu (Yaoundé/Cameroun); Florentin Azia-Dimbu (Université Pédagogique Nationale Faculté)
    Abstract: This study investigates the relationship between social trust and intelligence. The extreme bound analysis of Levine and Renelt is employed to directly assess the strength of the nexus. The findings confirm the positive and robust nexus between social trust and intelligence. We have contributed to the literature by confirming that the previously established positive linkage between intelligence and trust is not statistically fragile. In fact the nexus withstands further empirical scrutiny with more robust empirical strategies.
    Keywords: Trust; Intelligence; Human Capital; Extreme Bound Analysis
    JEL: G20 I20 I29 J24 P48 Z13
    Date: 2016–03
  3. By: Gunnes, Trude; Donze, Jocelyn
    Abstract: Student motivation is primordial for educational success. We develop a theoretical model in which a teacher manages student motivation through the choice of teaching practices. We show that only high-ability students can be motivated by extrinsically-oriented teaching practices. For low-ability or myopic students, intrinsically-oriented teaching practices are more effective in fostering student achievement. Furthermore, the choice of teaching practices depends on their relative costs, the teacher's objective function (utilitarian or Rawlsian), and the teacher's time preferences. We draw important policy implications regarding teacher effectiveness, the harmfulness of not tailoring teaching practices to student types, and how to limit student dropouts.
    Keywords: Teaching practices; cognitive and non-cognitive skills; student achievement; utilitarian and Rawlsian maximizers; achievement goal theory
    JEL: A12 C70 D03 I24
    Date: 2016
  4. By: Hiromasa Takahashi (Faculty of International Studies, Hiroshima City University); Junyi Shen (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Kazuhito Ogawa (Faculty of Sociology and Center for Experimental Economics, Kansai University)
    Abstract: We examine gender-specific reference-dependent preferences in a trust game experiment. Different participation fees and one question eliciting subjects' reference points were used to categorize subjects into three frames: the gain frame, gain or loss frame, and loss frame. We find that (i) men are risk-seeking in both the gain and the loss frame; (ii) women are not always more risk-averse than men; and (iii) women display other-regarding preferences only when they are in the gain frame. These results demonstrate the importance of taking account of both gender differences and reference-dependent preferences when examining individuals' economic behavior.
    Keywords: Reference-dependent preference, Gender difference, Trust game experiment, Risk preference, Other-regarding preference
    JEL: C72 C91
    Date: 2016–09
  5. By: Holger Gerhardt; Guido P. Biele; Hauke R. Heekeren; Harald Uhlig
    Abstract: We investigate how stable individuals’ risk attitudes are with respect to changes in cognitive load. In a laboratory experiment using pairwise lottery choice and a within-subject design, we showthat putting subjects under load via a concurrent working-memory task significantly increases their risk aversion. Subjects made significantly faster choices under load. Regardless of load, they responded faster when choosing the less risky option in safe–risky trials, but not in risky–risky trials. We discuss how these findings relate to both dual-system and unitarysystem theories of decision making.We observe that predictions of both recent dual-system and drift–diffusion models of the decision-making process are confirmed by our data and argue for a convergence of these to-date separate strands of the literature.
    Keywords: Risk aversion, cognitive load, working memory, dual-system approach, multiplesystem approach, dual-self model, drift–diffusion model, response times
    JEL: C91 D03 D81 D87
    Date: 2016–03
  6. By: Deckers, Thomas; Falk, Armin; Kosse, Fabian; Szech, Nora
    Abstract: This paper studies how individual characteristics, institutions, and their interaction influence moral decisions. We validate a moral paradigm focusing on the willingness to accept harming third parties. Consequences of moral decisions are real. We explore how moral behavior varies with individual characteristics and how these characteristics interact with market institutions compared to situations of individual decision-making. Intelligence, female gender, and the existence of siblings positively influence moral decisions, in individual and in market environments. Yet in markets, most personalities tend to follow overall much lower moral standards. Only fluid intelligence specifically counteracts moraleroding effects of markets.
    Keywords: homo moralis,moral personality,real moral task,markets and personality,trade and morals
    JEL: D02 D03 J10
    Date: 2016
  7. By: Maria A. Cattaneo (Swiss Coordination Center for Research in Education); Chantal Oggenfuss (Swiss Coordination Center for Research in Education); Stefan C. Wolter (University of Bern; Swiss Coordination Center for Research in Education; CESifo and IZA)
    Abstract: Although instruction time is an important and costly resource in education production, there is a remarkable scarcity of research examining the effectiveness of its use. We build on the work of Lavy (2015) using the variance of subject-specific instruction time within Switzerland to determine the causal impact of instruction time on student test scores, as measured by the international PISA test (2009). We extend the analyses in two ways and find that students must differ considerably in the time needed to learn. This difference is supported by our findings that the effectiveness of instructional time varies substantially between different school (ability) tracks and that additional instruction time significantly increases the within-school variance of subject-specific test scores.
    Keywords: instruction time, PISA, fixed-effect models, tracking
    JEL: C21 I21 I25
    Date: 2016–03
  8. By: Christian Schubert (University of Kassel)
    Abstract: Nudges, i.e., low-cost interventions that steer people’s behavior without compromising their freedom of choice, are the key contribution of ‘Libertarian Paternalism’ (LP) to public policy. They typically work through either harnessing or responding to people’s cognitive biases and heuristics – which is why they have been criticized for being manipulative and for compromising personal autonomy. We argue, though, that (i) nudging hardly compromises autonomy, properly understood, and that (ii) it rather risks undermining people’s agency, i.e., their ability to engage in creative self-constitution over time. This reorientation has farranging implications for the ethics of behavioral policies in general and LP in particular.
    Date: 2015
  9. By: Giovanna d’Adda (Politecnico di Milano); Valerio Capraro (Center for Mathematics and Computer Science (CWI)); Massimo Tavoni (Politecnico di Milano, Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC))
    Abstract: We examine whether spillovers of pro-social behavior depend on how behavioral changes are induced. We conduct a large experiment using economic games, with a Dictator Game (DG) followed by either an identical game or a Prisoner’s Dilemma (PD). We influence initial behavior through widely used policy instruments, either behaviorally informed (default, social norms) or with an economic/regulatory rationale (incentives, regulation). Our results provide evidence of positive spillovers to subsequent economic games (which are not treated), but only for the traditional economic/regulatory interventions and within the same game type. Specifically, inducing higher giving in the first stage leads to subsequent higher altruism in the DG, but not to more cooperation in the PD. The carry over of pro-social behavior appears to be driven by an anchoring on the initial donation. We also measure observers’ beliefs and we find that these results are not correctly anticipated by third parties, who systematically overestimate both the direct effect of behaviorally informed interventions on initial donations and their spillover to subsequent donations.
    Keywords: Pro-social Behavior, Traditional and Behavioral Policies, Spillover Effects, Online Experiment
    JEL: H4 I3
    Date: 2015–10
  10. By: Bolle, Friedel; Spiller, Jörg
    Abstract: In Binary Threshold Public Good (BTPG) games players contribute or not to the production of a public good which is produced if and only if there are "enough" contributors. There is a plethora of equilibria in BTPG games. We experimentally test general theoretical attributes of equilibria and proposals for equilibrium selection. As theory predicts, if the cost/benefit ratio is the same, then subjects play (almost) the same mixture of strategies and, after switching from a positive to a negative frame, the theoretically expected "mirrored" behavior can be observed, i.e. contrary to most linear Public Good experiments we do not find a framing effect. A finite mixture model successfully (i.e. without rejection in a chi-square test) describes behavior in all eight experimental games (same parameters for four thresholds and positive/negative frame). The Harsanyi-Selten theory of equilibrium selection is moderately supported. Efficiency as an equilibrium selection device and also risk dominance are clearly rejected.
    Keywords: Binary Threshold Public Goods,framing,equilibrium selection,payoff dominance,risk dominance,efficiency,experiment
    JEL: C72 D72 H41
    Date: 2016
  11. By: Adrian Bruhin; Ernst Fehr; Daniel Schunk
    Abstract: There is vast heterogeneity in the human willingness to weigh others’ interests in decision making. This heterogeneity concerns the motivational intricacies as well as the strength of other-regarding behaviors, and raises the question how one can parsimoniously model and characterize heterogeneity across several dimensions of social preferences while still being able to predict behavior over time and across situations. We tackle this task with an experiment and a structural model of preferences that allows us to simultaneously estimate outcome-based and reciprocity-based social preferences. We find that nonselfish preferences are the rule rather than the exception. Neither at the level of the representative agent nor when we allow for several preference types do purely selfish types emerge. Instead, three temporally stable and qualitatively different other-regarding types emerge endogenously, i.e., without prespecifying assumptions about the characteristics of types. When ahead, all three types value others’ payoffs significantly more than when behind. The first type, which we denote as strongly altruistic type, is characterized by a relatively large weight on others’ payoffs - even when behind - and moderate levels of reciprocity. The second type, denoted as moderately altruistic type, also puts positive weight on others’ payoff, yet at a considerable lower level, and displays no positive reciprocity while the third type is behindness averse, i.e., puts a large negative weight on others’ payoffs when behind and behaves selfishly otherwise. We also find that there is an unambiguous and temporally stable assignment of individuals to types. Moreover, the three-type model substantially improves the (out-of-sample) predictions of individuals’ behavior across additional games while the information contained in subjectspecific parameter estimates leads to no or only minor additional predictive power. This suggests that a parsimonious model with three types captures the bulk of the predictive power contained in the preference estimates.
    Keywords: Social Preferences; Heterogeneity; Stability; Finite Mixture Models
    JEL: C49 C91 D03
    Date: 2016–01
  12. By: Woods, Daniel; Servátka, Maroš
    Abstract: This paper studies psychological forward induction and the updating of beliefs in the lost wallet game (Dufwenberg & Gneezy, 2000), which is required to derive a prediction for guilt averse agents. Our experiment tests whether the second movers psychologically induct forward and update their beliefs after observing their paired first movers’ decision by eliciting beliefs with different second mover knowledge of first mover decision, depending on treatment. We find that second movers do update their beliefs conditional on receiving information on the first mover’s action, supporting psychological forward induction.
    Keywords: beliefs, experiment, guilt aversion, lost wallet game, psychological forward induction, updating
    JEL: C70 C91
    Date: 2016–03–09

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.
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