nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2016‒05‒14
twelve papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Incentivizing Creativity: A Large-Scale Experiment with Tournaments and Gifts By Christiane Bradler; Susanne Neckermann; Arne Warnke
  2. Hidden persuaders: do small gifts lubricate business negotiations? By Michel André Maréchal; Christian Thöni
  3. Diffusion of Being Pivotal and Immoral Outcomes By Armin Falk; Nora Szech
  4. Community Supported Agriculture and Preferences for Risk and Fairness By Bernard, Kévin; Bonein, Aurélie; Bougherara, Douadia
  5. Locus of Control and Its Intergenerational Implications for Early Childhood Skill Formation By Warn N. Lekfuangfu; Nattavudh Powdthavee; Nele Warrinnier; Francesca Cornaglia
  6. How to hire helpers? Evidence from a field experiment By Bernd Irlenbusch; Dirk Sliwka; Julian Conrads; Rainer Rilke; Tommaso Reggiani
  7. Know when to Fold 'em: The Grit Factor By Larbi Alaoui; Christian Fons-Rosen
  8. Motivating Effort in Contributing To Public Goods Inside Organizations: Field Experimental Evidence By Blasco, Andrea; Olivia S. Jung; Karim R. Lakhani
  9. Emotion vs. cognition - Experimental evidence on cooperation from the 2014 Soccer World Cup By Graf Lambsdorff, Johann; Giamattei, Marcus; Werner, Katharina; Schubert, Manuel
  10. Moral Costs and Rational Choice: Theory and Experimental Evidence By James C. Cox; John A. List; Michael Price; Vjollca Sadiraj; Anya Samek
  11. Long-lasting effects of temporary incentives in public good games. By Mathieu Lefebvre; Anne Stenger
  12. What's in a Name ?The Effect of an Artist's Name on Aesthetic Judgements By Axel Cleeremans; Victor Ginsburgh; Olivier Klein; Abdul Ghafar Noury

  1. By: Christiane Bradler (ZEW Centre for European Economic Research, Mannheim, Germany); Susanne Neckermann (Erasmus University Rotterdam, the Netherlands, and ZEW Centre for European Economic Research, Mannheim, Germany); Arne Warnke (ZEW Centre for European Economic Research, Mannheim, Germany)
    Abstract: This paper reports the results from a large-scale laboratory experiment investigating the impact of tournament incentives and wage gifts on creativity. We find that tournaments substantially increase creative output, with no evidence for crowding out of intrinsic motivation. By comparison, wage gifts are ineffective. Additional treatments show that it is the uncertain mapping between effort and output that inhibits reciprocity. This uncertainty is prevalent in creative and other complex tasks. Our findings provide a rationale for the frequent use of tournaments when seeking to motivate creative output.
    Keywords: creativity; incentives; tournament; reciprocity; experiment; crowding-out
    JEL: C91 D03 J33 M52
    Date: 2016–05–03
  2. By: Michel André Maréchal; Christian Thöni
    Abstract: Gift-giving customs are ubiquitous in social, political, and business life. Legal regulation and industry guidelines for gifts are often based on the assumption that large gifts have the potential to influence behavior and create confl of interest, but small gifts do not. However, scientific evidence on the impact of small gifts on business relationships is scarce. We conducted a controlled field experiment in collaboration with sales agents of a multinational consumer products company to study the influence of small gifts on the outcome of business negotiations. We find that small gifts matter. On average, sales representatives generate more than twice as much revenue when they distribute a small gift at the onset of their negotiations. However, we also find that small gifts tend to be counterproductive when purchasing and sales agents meet for the first time, underlining that the nature of the business relationship crucially affects the profitability of gifts.
    Keywords: Reciprocity, gift exchange, field experiment, negotiations
    JEL: D63 C93
    Date: 2016–04
  3. By: Armin Falk (Universität Bonn); Nora Szech (Karlsruher Institut für Technologie)
    Abstract: We study how diffusing being pivotal affects the willingness to support immoral outcomes. Subjects decide about agreeing to kill mice and receiving money versus objecting to kill mice and foregoing the monetary amount. We investigate an exogenous diffusion of being pivotal imposed by organizational design as well as self-imposed, endogenous diffusion of being pivotal. Regarding exogenous diffusion, we compare two treatments. We keep overall financial incentives and overall payoff consequences identical, yet vary the decision rule: In Baseline subjects decide individually about the life of one mouse. In the Exogenous Diffusion treatment, subjects are organized into groups of eight. Eight mice are killed if at least one subject supports the killing. The fraction of subjects agreeing to kill is significantly higher in Exogenous Diffusion than in Baseline. Moreover, in Exogenous Diffusion, the likelihood to agree to the killing decreases in subjective perceptions of being pivotal. We then show that many subjects actually have a preference to actively create a situation where being pivotal is diffused. In the Endogenous Diffusion treatment, each subject chooses the probability of killing a mouse. The monetary amount a subject receives is proportional to the killing probability. More than 30 percent of subjects opt for intermediate killing probabilities, thereby actively diffusing being pivotal at a proportional reduction of money. Response times and feelings of remorse and bad conscience suggest that it is in particular subjects experiencing moral conflict who prefer diffusing being pivotal. Presumably, this serves as a means to keep a positive self-image while behaving selfishly.
    Keywords: diffusion of being pivotal, morality, replacement logic, self-image, response times
    JEL: C91 D01 D03 D23 D63
    Date: 2016–05
  4. By: Bernard, Kévin; Bonein, Aurélie; Bougherara, Douadia
    Abstract: We aim to elicit consumers’ preferences for attributes of consumer supported agriculture (CSA) contracts and their determinants, especially risk and fairness preferences. We combine two incentivized field experiments with a stated choice survey. Risk preferences are structurally-elicited from several binary lottery choices and fairness preferences from a modified dictator game. We use a stated choice survey to determine consumers’ preferences for three attributes of CSA contracts: duration, loss in basket size due to production risks and price change. We face-to-face interviewed 162 CSA members. In line with fairness theory, we find consumers are averse to advantageous inequality (AI) toward CSA and non CSA farmers and averse to disadvantageous inequality (DI) toward non CSA farmers; but, we also find evidence of DI seeking toward CSA farmers. In the stated choice survey, we find consumers prefer longer contracts and that it is risk-driven rather than fairness-driven. As expected, consumers exhibit a dislike for losses and for share price increases. We find a high willingness to pay to avoid losses. High AI averse consumers tend to be less sensitive to losses. High DI seeking consumers tend to be less sensitive to losses and price increase.
    Keywords: CSA, Stated choice, Field experiment, Risk preferences, Fairness preferences, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Environmental Economics and Policy, Risk and Uncertainty, C93, D63, D81, Q18,
    Date: 2016
  5. By: Warn N. Lekfuangfu (Chulalongkorn University and CEP, London School of Economics); Nattavudh Powdthavee (CEP, London School of Economics); Nele Warrinnier (CEP, London School of Economics and University of Leuven); Francesca Cornaglia (Queen Mary University of London and CEP, London School of Economics)
    Abstract: This paper builds upon Cunha's (2015) subjective rationality model in which parents have a subjective belief about the impact of their investment on the early skill formation of their children. We propose that this subjective belief is determined in part by locus of control (LOC), i.e., the extent to which individuals believe that their actions can influence future outcomes. Consistent with the theory, we show that maternal LOC measured at the 12th week of gestation strongly predicts maternal attitudes towards parenting style, maternal time investments, as well as early and late cognitive outcomes. We also utilize the variation in inputs and outputs by maternal LOC to help improve the specification typically used in the estimation of skill production function parameters.
    Keywords: Locus of control, Parental investment, Human capital accumulation, Early skill formation, ALSPAC
    JEL: J01 I31
    Date: 2016–04
  6. By: Bernd Irlenbusch; Dirk Sliwka; Julian Conrads; Rainer Rilke; Tommaso Reggiani
    Abstract: How to hire voluntary helpers? We shed new light on this question by reporting a field experiment in which we invited 2859 students to help at the 'ESA Europe 2012' conference. Invitation emails varied non-monetary and monetary incentives to convince subjects to offer help. Students could apply to help at the conference and, if so, also specify the working time they wanted to provide. Just asking subjects to volunteer or offering them a certificate turned out to be significantly more motivating than mentioning that the regular conference fee would be waived for helpers. By means of an online-survey experiment, we find that intrinsic motivation to help is likely to have been crowded out by mentioning the waived fee. Increasing monetary incentives by varying hourly wages of 1, 5, and 10 Euros shows positive effects on the number of applications and on the working time offered. However, when comparing these results with treatments without any monetary compensation, the number of applications could not be increased by offering money and may even be reduced.
    Date: 2015
  7. By: Larbi Alaoui; Christian Fons-Rosen
    Abstract: This paper investigates the way different sides of grit influence behavior. We show that, in addition to grit's well-known upside in achieving economic success, it has a potential downside too. Specifically, we conduct an experiment using a game of luck and elicit each individual's intended plan of action and compare it to actual choice. We find that grittier individuals have a higher tendency to overplay. We then split grit into two new categories, tenacity and diligence, and obtain that tenacity alone captures the difficulty in respecting ex-ante preferences when this means accepting defeat. Both components of grit correlate with lower self-reported procrastination problems and higher self-esteem, with diligence being the more beneficial trait. Overall, the results indicate that diligence has a clear upside while tenacity has both the upside of not giving up and the downside of not letting go.
    Keywords: noncognitive skills, grit, tenacity, diligence
    JEL: C91 D03 I20
    Date: 2016–04
  8. By: Blasco, Andrea; Olivia S. Jung; Karim R. Lakhani
    Abstract: We investigate the factors driving workers? decisions to generate public goods inside an organization through a randomized solicitation of workplace improvement proposals in a medical center with 1200 employees. We find that pecuniary incentives, such as winning a prize, generate a threefold increase in participation compared to non-pecuniary incentives alone, such as prestige or recognition. Participation is also increased by a solicitation appealing to improving the workplace. However, emphasizing the patient mission of the organization led to countervailing effects on participation. Overall, these results are consistent with workers having multiple underlying motivations to contribute to public goods inside the organization consisting of a combination of pecuniary and altruistic incentives associated with the mission of the organization.
    Date: 2016–04
  9. By: Graf Lambsdorff, Johann; Giamattei, Marcus; Werner, Katharina; Schubert, Manuel
    Abstract: We investigate methods for stimulating cooperation by help of a controlled lab-inthefield experiment. This allows us to compare group-related emotional and cognitive stimuli. The experiment was carried out in a sober classroom and in an emotionally loaded environment, a Bavarian beer garden during a public viewing event with a large screen displaying the soccer game. Contrary to widespread belief, we do not find shared and contagious emotions at the public viewing event to advance cooperation. Variations of the game reveal that only cognitive factors, namely the joint attention to a common goal, substantially increase cooperation.
    Date: 2016
  10. By: James C. Cox; John A. List; Michael Price; Vjollca Sadiraj; Anya Samek
    Abstract: The literature exploring other regarding behavior sheds important light on interesting social phenomena, yet less attention has been given to how the received results speak to foundational assumptions within economics. Our study synthesizes the empirical evidence, showing that recent work challenges convex preference theory but is largely consistent with rational choice theory. Guided by this understanding, we design a new, more demanding test of a central tenet of economics—the contraction axiom—within a sharing framework. Making use of more than 325 dictators participating in a series of allocation games, we show that sharing choices violate the contraction axiom. We advance a new theory that augments standard models with moral reference points to explain our experimental data. Our theory also organizes the broader sharing patterns in the received literature.
    JEL: C9 C93 D01 D03
    Date: 2016–05
  11. By: Mathieu Lefebvre; Anne Stenger
    Abstract: This paper addresses the question of cooperative behaviours in the long run after the removal of incentives to contribute to a public good game. This question becomes central when looking both at cost-effectiveness of public program and sustainability of the funding institutions. This paper looks at the potential permanence effect of incentives by comparing nonmonetary and monetary, positive and negative, incentives to contribute in public-good game experiments. The results show first that both monetary and nonmonetary punishments and rewards significantly increase contributions compared to the baseline but monetary sanctions lead to the highest contributions while nonmonetary sanctions lead to the lowest contributions. Second, the four types of incentives do not display long-lasting effects. In every treatment, contributions fall to the level of the initial contributions in the baseline right after the withdrawal of the incentives. Third, the results show that there are no change of preferences following the introduction of the incentives since those who free-ride and have been highly sanctioned are those who contribute the less after the removal of the sanctions. Finally, one interesting result is the same efficiency of non-monetary and monetary rewards on contribution. These findings underline the importance of looking both at the type of incentives and to better understand the changes in behavior in institutional arrangements between individuals when long-lasting cooperation is sought.
    Keywords: Experiments, Monetary incentives, Non-monetary incentives, Rewards, Punishments, Long-lasting cooperation, Voluntary Contribution Mechanism.
    JEL: D81 C91
    Date: 2016
  12. By: Axel Cleeremans; Victor Ginsburgh; Olivier Klein; Abdul Ghafar Noury
    Abstract: Both economists and art historians suggest that the name of the artist is important and belongs with the work. We carried out an experiment to explore the influence that the presence and knowledge of an artist’s name exert on aesthetic judgments. Forty participants (20 students majoring in psychology and 20 in art history) were asked to rank twelve works painted by different artists, some of which bore the name of their actual creators, others not. The results demonstrated that the presence of artists’ names led to higher rankings among psychology majors, but only if they had been attending to the presented names. In contrast, in the case of art students, it was knowledge of the artists that predicted judgments. The results suggest that for people untrained in the visual arts, the presence of a name can function as heuristic cue to denote value.Keywords: Name of artist, context, perception, experimental aesthetics.
    Keywords: name of artist; context; perception; experimental aesthetics
    Date: 2016–05

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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