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on Cognitive and Behavioural Economics |
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Issue of 2016‒06‒04
twelve papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Gaudeul, Alexia |
| Abstract: | We refine the understanding of individual preferences across social lotteries, whereby the payoffs of a pair of subjects are exposed to random shocks. We find that aggregate behavior is ex-post and ex-ante inequality averse, but also that there is a wide variety of individual preferences and that the majority of subjects are indifferent to social concerns under risk. Furthermore, we determine whether subjects are averse to collective risk - the variability in the sum of payoffs of the pair. We do so by varying the presentation of payoffs. They are shown side by side in one treatment and added-up in the other. The first presentation draws attention to inequality in payoffs, the second to collective risk. We find that subjects dislike lotteries that lead to ex-post unequal distributions of payoffs in both cases and that emphasizing collective risk changes choice only marginally and not significantly, though in the direction of collective risk reduction. We conclude that ex-post inequality aversion is the primary concern in the evaluation of social lotteries while collective risk is only of secondary interest. |
| Keywords: | Altruism,Collective Risk,Experimental Economics,Fairness,Inequality,Risk,Social Lotteries,Social Preferences |
| JEL: | C91 D63 D81 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:283&r=cbe |
| By: | Benyishay,Ariel; Jones,Maria Ruth; Kondylis,Florence; Mobarak,Ahmed Mushfiq |
| Abstract: | To explain persistent gender gaps in market outcomes, a lab experimental literature explores whether women and men have innate differences in ability (or attitudes or preferences), and a separate field-based literature studies discrimination against women in market settings. This paper posits that even if women have comparable innate ability, their relative performance may suffer in the market if the task requires them to interact with others in society, and they are subject to discrimination in those interactions. The paper tests these ideas using a large-scale field experiment in 142 Malawian villages where men or women were randomly assigned the task of learning about a new agricultural technology, and then communicating it to others to convince them to adopt it. Although female communicators learn and retain the new information just as well, and those taught by women experience higher farm yields, the women are not as successful at teaching or convincing others to adopt the new technology. Micro-data on individual interactions from 4,000 farmers in these villages suggest that other farmers perceive female communicators to be less able, and are less receptive to the women's messages. Relatively small incentives for rewards undo the disparity in performance by encouraging added interactions, improving farmers'accuracy about female communicators'relative skill. |
| Keywords: | Agricultural Knowledge and Information Systems,Gender and Health,Rural Development Knowledge&Information Systems,Gender and Law,Housing&Human Habitats |
| Date: | 2016–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7689&r=cbe |
| By: | Wenjun Ma; Burkhard Schipper (Department of Economics, University of California Davis) |
| Abstract: | One fundamental assumption often made in the literature on unawareness is that risk preferences are invariant to changes of awareness. We study how exposure to unawareness a ects choices under risk. Participants in our experiment choose repeatedly between varying sure outcomes and a lottery in 3 phases. All treatments are exactly identical in phase 1 and phase 3, but di er in phase 2. There are ve di erent treatments pertaining to the lottery faced in phase 2: The control treatment (i.e., a standard lottery), the treatment with awareness of unawareness of lottery outcomes but known number of outcomes, the treatment with awareness of unawareness of outcomes but with unknown number of outcomes, the treatment with unawareness of unawareness of some outcomes, and the treatment with an ambiguous lottery. We study both whether behavior di ers in phase 3 across treatments (between subjects e ect) and whether di erences of subjects' behavior between phases 1 and phase 3 di ers across treatments (within subject e ects). We observe no signi cant treatment e ects. |
| Keywords: | Unawareness, Awareness of unawareness, Risk aversion, Experiments. |
| JEL: | C91 C92 D81 D87 |
| Date: | 2016–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:cda:wpaper:16-2&r=cbe |
| By: | He, Chenyi; Gao, Zhifeng; House, Lisa; Guan, Zhengfei |
| Abstract: | Growth in imports of strawberries, particularly from Mexico, threaten the Florida strawberry industry. To better compete with strawberries from Mexico, the Florida strawberry industry has focused on product differentiation with an emphasis on quality. In this study, we conducted one sensory test combined with experimental auctions to examine the impact of fruit quality and labeling strategies on consumer purchase. Two strawberry varieties, Sweet Sensation and Festival are used in the experiment. Ten samples with different labels under different strawberry varieties were randomly presented to participants. In total 103 panelists participated in sensory test and experimental auction. Results show that without labeling, consumers cannot distinguish different varieties of strawberry. In most cases, labeling varieties does not directly affect consumer preference. This indicates that actions need to be taken to improve consumers’ awareness and recognition of variety labels such as Sweet Sensation. |
| Keywords: | Sensory Quality, Labels, Fresh Strawberries, Experiment Auction, Agribusiness, Consumer/Household Economics, Institutional and Behavioral Economics, Marketing, |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea16:230122&r=cbe |
| By: | Santiago I. Sautua |
| Abstract: | Previous research has shown that often there is clear inertia in individual decision making? that is, a tendency for decision makers to choose a status quo option. I conduct a laboratory experiment to investigate two potential determinants of inertia in uncertain environments: (i) regret aversion and (ii) ambiguity-driven indecisiveness. I use a between-subjects design with varying conditions to identify the e¤ects of these two mechanisms on choice behavior. In each condition, participants choose between two simple real gambles, one of which is the status quo option. I ?nd that inertia is quite large and that both mechanisms are equally important. |
| Keywords: | status quo, inertia, reference-dependent preferences, regretaversion, ambiguity, indecisiveness |
| JEL: | C91 D01 D03 D81 |
| Date: | 2016–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:014587&r=cbe |
| By: | Riccardo Ferretti; Francesca Pancotto; Enrico Rubaltelli |
| Abstract: | We present a test of the behavioral versus the rational model of advertising in the financial market. We analyze the Granger-causality relationship existing between Comit stock market index and advertising of financial products and services from the most important daily published financial newspaper in Italy. We run the test for both the risky and non-risky advertising, finding that the behavioral model of advertising is supported when risky financial products and services are considered, while the rational model is true for the non-risky. We ascribe this result to the dual process of reasoning: When investors evaluate the decision to buy risky nancial products and services, they activate the automatic, rapid decision making process. The behavioral model of advertising copes with it and provides an advertising strategy that responds to market evolutions. When non-risky financial products and services are considered, a di erent mental process, requiring slow and sequential reasoning, operates, compatibly with a rational decision making process. |
| Keywords: | advertising, stock market index, behavioral model, dual process, Granger Causality |
| JEL: | G02 G20 M37 O51 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:mod:wcefin:16105&r=cbe |
| By: | Zhuoqiong (Charlie) Chen; Tobias Gesche |
| Abstract: | We show that a one-off incentive to bias advice has a persistent effect on advisers' own actions and their future recommendations. In an experiment, advisers obtained information about a set of three differently risky investment options to advise less informed clients. The riskiest option was designed such that it is only preferred by risk-seeking individuals. When advisers are offered a bonus for recommending this option, half of them recommend it. In contrast, in a control group without the bonus only four percent recommend it. After the bonus was removed, its effect remained: In a second recommendation for the same options but without a bonus, those advisers who had previously faced it are almost six times more likely to recommend the riskiest option compared to the control group. A similar increase is found when advisers make the same choice for themselves. To explain our results we provide a theory based on advisers trying to uphold a positive self-image of being incorruptible. Maintaining a positive self-image then forces them to be consistent in the advice they give, even if it is biased. |
| Keywords: | Advice-giving, conflict of interest, self-signaling, self-deception |
| JEL: | C91 D03 D83 G11 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:228&r=cbe |
| By: | Dalton, Patricio (Tilburg University, School of Economics and Management); Ghosal, Sayantan |
| Abstract: | This paper incorporates self-fullling mistakes into an otherwise classical decision-making framework. A behavioural agent makes a mistake when he fails to internalize all the consequences of his actions on himself. We show that Sen's axioms and fully characterize choice data consistent with behavioral agents. These two axioms are weaker than Sen's axioms and that fully characterize rational agents. We oer a welfare benchmark that can be applied to existing behavioural economics models and show the conditions under which our welfare ranking can be used to infer welfare dominated (i.e. mistaken) choices using choice data alone. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:4ea1a236-5307-4b4b-b268-e6c0fbf527f4&r=cbe |
| By: | Yola Engler; Rudolf Kerschbamer; Lionel Page |
| Abstract: | We investigate the role of intentions in two-player two-stage games. For this purpose we systematically vary the set of opportunity sets the first mover can chose from and study how the second mover reacts not only to opportunities of gains but also of losses created by the choice of the first mover. We find that the possibility of gains for the second mover (generosity) and the risk of losses for the first mover (vulnerability) are important drivers for second mover behavior. On the other hand, efficiency concerns and an aversion against violating trust seem to be far less important motivations. We also find that second movers compare the actual choice of the first mover and the alternative choices that would have been available to him to allocations that involve equal material payoffs. |
| Keywords: | Social Preferences; Other-Regarding Preferences; Intentions; Reciprocity; Trust Game; |
| JEL: | C91 C92 D63 D64 |
| Date: | 2016–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:qut:qubewp:wp035&r=cbe |
| By: | Carroll, Kathryn A.; Samek, Anya Savikhin; Zepeda, Lydia |
| Abstract: | The Center for Disease Control (CDC) estimates that at least 68% of U.S. adults aged 20 and older are overweight with BMIs of 25+. A major component of this problem is the decision to habitually consume high quantities of low-nutrient, high-calorie foods (NIH, 2012). This study uses an artefactual field experiment on food choice, conducted in a large Midwestern U.S. city during fall 2015, to explore whether product bundles (consisting of primarily fruit & vegetable (F&V) items) can serve as a behavioral intervention to increase F&V selection. Also of interest was determining whether shopping under cognitive load influenced both item and bundle selection using a dual-self framework, and whether bundles need offer a price discount. Study participants shopped a grocery display under one of six different treatments, with differences examined among the proportion of items selected from three categories: Fruit and Vegetables, Junk Food/Snacks, and Protein/Dairy/Grains. The proportions of items selected by category were also analyzed using a fractional multinomial regression model. Results uncover that product bundles need not offer a price discount in order to effectively increase F&V selection. In fact, discounted bundles were counterproductive at increasing F&Vs when shoppers were under high cognitive load. Product bundles may be preferred by consumers as a means through which to lessen the cognitive strain of the shopping process, and could serve as a potential behavioral intervention to increase retail F&V sales. |
| Keywords: | food choice, fruit and vegetable selection, product bundling, cognitive load, artefactual field experiment, dual-self theory, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Institutional and Behavioral Economics, Marketing, C91, D12, I12, Q13, |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:236130&r=cbe |
| By: | Di Falco, Salvatore (University of Geneva); Magdalou, Brice (University of Montpellier 1); Masclet, David (University of Rennes); Villeval, Marie Claire (CNRS, GATE); Willinger, Marc (University of Montpellier 1) |
| Abstract: | Embezzlement is a major concern in various settings. By means of a sequential modified dictator game, we investigate theoretically and experimentally whether making information more transparent and reducing the number of intermediaries in transfer chains can reduce embezzlement and improve the recipients' welfare. Consistent with reference-dependent preferences in terms of moral ideal, we show that the impact of transparency is conditional on the length of the transfer chain and on the position of the intermediaries in the chain. Its direct effect on image encourages honesty. Its indirect effect via expectations plays in the opposite direction, motivating individuals to embezzle more when they expect that the following intermediary will embezzle less. Senders react positively to a reduction of the length of the chain but negatively to transparency. |
| Keywords: | embezzlement, corruption, dishonesty, transparency, experiment |
| JEL: | C91 D83 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9925&r=cbe |
| By: | Alejandro Arrieta (Florida International University); Ariadna García-Prado (Universidad Pública de Navarra); Paula González (Universidad Pablo de Olavide); Jose Luis Pinto-Prades (Universidad de Navarra) |
| Abstract: | The aim of this paper is to investigate how risk attitudes in medical decisions for others vary across health contexts. A lab experiment was designed to elicit the risk attitudes of 257 students by assigning them the role of a physician who must decide between treatments for patients. An interval regression model was used to estimate individual coefficients of relative risk aversion, and an estimation model was used to test for the effect of type of medical decision and experiment design characteristics on elicited risk aversion. We find that: (i) risk preferences for decisions involving life expectancy are different from those involving quality of life, but risk aversion prevails in all types of medical decisions; (ii) students enrolled in health-related degrees show a higher degree of risk aversion; and (iii) real rewards for third parties (patients) make subjects less risk-averse. The results underline the importance of accounting for doctors’ attitudes towards risk in medical decision-making. |
| Keywords: | physicians, risk aversion, health contexts, laboratory experiment, multiple price list format. |
| JEL: | I1 C91 D81 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:16.07&r=cbe |