nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2016‒05‒28
eight papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. You’ll never walk alone. An experimental study on receiving money By Tjøtta, Sigve
  3. Incentivizing creativity: A large-scale experiment with tournaments and gifts By Bradler, Christiane; Neckermann, Susanne; Warnke, Arne Jonas
  4. Models of affective decision-making: how do feelings predict choice? By Caroline J. Charpentier; Jan-Emmanuel De Neve; Jonathan P. Roiser; Tali Sharot
  5. Cooperation or Competition? A field experiment on non-monetary learning incentives By Margherita Fort; Maria Bigoni; Mattia Nardotto; Tommaso Reggiani
  6. Economics, Neuroeconomics, and the Problem of Identity By Davis, John B.
  7. Preferences and Social Influence By Chaim Fershtman; Uzi Segal
  8. Immaterial and monetary gifts in economic transactions. Evidence from the field By Michael Kirchler; Stefan Palan

  1. By: Tjøtta, Sigve (Department of Economics, University of Bergen)
    Abstract: Is more money better than less? Not always. It depends on the situation. If more money for oneself means less money for a stranger, the majority of participants in dictator games choose less money for themselves. But if they really are alone - and thus do not have to share with a stranger - will they always choose to receive more money instead of less? Here, I report results from seven experiments. On average, one-third of a total of 3,351 participants chose to receive less money instead of more. In one experiment even a majority choose to receive less money. In four of the experiments the participants also faced the corresponding dictator experiment where there is an explicit anonymous recipient of the foregone money. There is a high positive correlation between “giving” as a dictator and when alone. This result opens up possibilities for broader interpretations that go beyond social the preference interpretation of giving in the dictator game.
    Keywords: More or less Money; Dictator game; Distributional and non-distributional norms
    JEL: D01 D03 D63
    Date: 2016–05–13
  2. By: Santiago I. Sautua
    Abstract: Attitudes toward risk in?uence the decision to diversify among uncertain options. Yet, because in most situations the options are ambiguous, attitudes toward ambiguity may also play an important role. I conduct a laboratory experiment to investigate the effect of ambiguity on the decision to diversify. I fi?nd that diversi?cation is more prevalent and more persistent under ambiguity than under risk. Moreover, excess diversi?cation under ambiguity is driven by participants who stick with a status quo gamble when diversi?cation among gambles is not feasible. This behavioral pattern cannot be accommodated by major theories of choice under ambiguity
    Keywords: risk, ambiguity, inertia, diversi?cation, reference-dependent preferences, indecisiveness, ambiguity aversion
    JEL: C91 D01 D03 D81
    Date: 2016–03–11
  3. By: Bradler, Christiane; Neckermann, Susanne; Warnke, Arne Jonas
    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
  4. By: Caroline J. Charpentier; Jan-Emmanuel De Neve; Jonathan P. Roiser; Tali Sharot
    Abstract: Intuitively, how we feel about potential outcomes will determine our decisions. Indeed, one of the most influential theories in psychology, Prospect Theory, implicitly assumes that feelings govern choice. Surprisingly, however, we know very little about the rules by which feelings are transformed into decisions. Here, we characterize a computational model that uses feelings to predict choice. We reveal that this model predicts choice better than existing value-based models, showing a unique contribution of feelings to decisions, over and above value. Similar to Prospect Theory value function, feelings showed diminished sensitivity to outcomes as value increased. However, loss aversion in choice was explained by an asymmetry in how feelings about losses and gains were weighed when making a decision, not by an asymmetry in the feelings themselves. The results provide new insights into how feelings are utilized to reach a decision.
    Keywords: decision-making; feelings; subjective well-being; value; utility; Prospect theory
    JEL: G32
    Date: 2016–02
  5. By: Margherita Fort; Maria Bigoni; Mattia Nardotto; Tommaso Reggiani
    Abstract: We assess the effect of two antithetic non-monetary incentive schemes based on grading rules on students' effort, using experimental data. We randomly assigned students to a tournament scheme that fosters competition between paired up students, a cooperative scheme that promotes information sharing and collaboration between students and a baseline treatment in which students can neither compete nor cooperate. In line with theoretical predictions, we find that competition induces higher effort with respect to cooperation, whereas cooperation does not increase effort with respect to the baseline treatment. Nonetheless, we find a strong gender effect since this result holds only for men while women do not react to this type of non-monetary incentives.
    Date: 2015
  6. By: Davis, John B. (Department of Economics Marquette University)
    Abstract: This paper reviews the debate in economics over neuroeconomics’ contribution to economics. It distinguishes majority and minority views, argues that this debate has been framed by mainstream economics’ conception of itself as an isolated science, and argues that this framing has put off the agenda in economics issues such as individual identity that are increasingly important in connection with the social and historical context of economic explanations in a changing complex world. The paper first discusses how the debate over neuroeconomics has been limited to the question of what information from other sciences might be employed in economics. It then goes on to the individual identity issue, and discusses how economics’ top-down, closed character generates a circular individual identity conception, while bottom-up, open character of psychology and neuroscience, and their continual concern with the changing relation between theory and evidence, has produced four competing individual identity conceptions in neuroeconomic research.
    Keywords: neuroeconomics, mainstream economics, isolated science, identity, revealed preference, circularity, MRI, distributed cognition
    JEL: A12 B41 D03 D87
    Date: 2016–04
  7. By: Chaim Fershtman (Tel Aviv University); Uzi Segal (Boston College)
    Abstract: Interaction between decision makers may affect their preferences. We consider a setup in which each individual is characterized by two sets of preferences: his unchanged core preferences and his behavioral preferences. Each individual has a social influence function that determines his behavioral preferences given his core preferences and the behavioral preferences of other individuals in his group. Decisions are made according to behavioral preferences. The paper considers different properties of these social influence functions and their effect on equilibrium behavior. We illustrate the applicability of our model by considering decision making by a committee that has a deliberation stage prior to voting.
    Keywords: Risk aversion, social influence, behavioral preferences
    JEL: D81
    Date: 2016–05–20
  8. By: Michael Kirchler; Stefan Palan
    Abstract: Reciprocation of monetary gifts is well-understood in economics. In contrast, there is little research on reciprocal behavior following immaterial gifts like compliments. We close this gap and investigate how employees reciprocate after receiving immaterial and material gifts. We purchase (1) ice cream from fast food restaurants, and (2) durum doner, a common lunch snack, from independent vendors. Prior to the food's preparation, we either compliment or tip the salesperson. Salespersons reciprocate compliments with higher product weight than in a control treatment. This reciprocal behavior grows over repeated transactions. Tips have a stronger level effect which marginally decreases over time.
    Keywords: gift exchange, reciprocity, natural field experiment
    JEL: D01 D03
    Date: 2016–05

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