nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2016‒06‒09
seven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Group and individual Time Preferences in Laboratory Experiments By Manami Tsuruta
  2. Cooperation, Punishment and Organized Crime: A Lab-in-the-Field Experiment in Southern Italy By Nese, Annamaria; O'Higgins, Niall; Sbriglia, Patrizia; Scudiero, Maurizio
  3. Mimetic behaviour and institutional persistence: A two-armed bandit experiment By Innocenti, Stefania; Cowan, Robin
  4. What is the Causal Impact of Knowledge on Preferences in Stated Preference Studies? By Jacob LaRiviere; Mikolaj Czajkowski; Nick Hanley; Katherine Simpson
  5. Priming in economics By Alain Cohn; Michel André Maréchal
  6. Bounded rationality as an essential component of the holdup problem By Erlei, Mathias; Roß, Wiebke
  7. The challenge of fear to Economics By Cedrini, Mario A.; Novarese, Marco

  1. By: Manami Tsuruta (Graduate School of Economics, Osaka University)
    Abstract: In this paper I analyze how different between groups and individual time preferences. I compare two hypothesis | Altruistic decision making and Selfish majority decision making | by laboratory experiments. In Altruistic decision making hypothesis I assume Altruistic people who discount themselves more than other group members, thus discount more themselves more than group decision making. In Selfish majority decision making hypothesis I assume selfish people and group time preferences are decided by majority rule. In experiments group are three persons. There are three condition. (1)Individual decision making for themselves. (2)Individual decision making for other group members. (3)Group decision making. In Group decision making Subjects anonymously talk with each other by PC. I found three results. First, people discount more in individual decision making for themselves than in group decision making. Second, Selfish majority decision making hypothesis is supported. Third, Reason why Individual time preferences and group time preferences differ is due to distortion of individual discount factor.
    Keywords: time preference, laboratory experiment, group decision making
    JEL: C91 C92 D03
    Date: 2016–05
  2. By: Nese, Annamaria (University of Salerno); O'Higgins, Niall (ILO International Labour Organization); Sbriglia, Patrizia (University of Naples II); Scudiero, Maurizio (Ministry of Justice, Italy)
    Abstract: This paper reports the results of an experimental investigation which allows a deeper insight into the nature of social preferences amongst organized criminals and how these differ from "ordinary" criminals on the one hand and from the non‐criminal population in the same geographical area on the other. We provide experimental evidence on cooperation and response to sanctions by running Prisoner's Dilemma and Third Party Punishment games on three different pools of subjects; students, 'Ordinary Criminals' and Camorristi (Neapolitan 'Mafiosi'). The latter two groups being recruited from within prisons. We are thus able to separately identify 'Prison' and 'Camorra' effects. Camorra prisoners show a high degree of cooperativeness and a strong tendency to punish, as well as a clear rejection of the imposition of external rules even at significant cost to themselves. In contrast, ordinary criminals behave in a much more opportunistic fashion, displaying lower levels of cooperation and, in the game with Third Party punishment, punishing less as well as tending to punish cooperation (almost as much) as defection. Our econometric analyses further enriches the analysis demonstrating inter alia that individuals' locus of control and reciprocity are associated with quite different and opposing behaviours amongst different participant types; a strong sense of self‐determination and reciprocity both imply a higher propensity to cooperate and to punish for both students and Camorra inmates, but quite the opposite for ordinary criminals, further reinforcing the contrast between the behaviour of ordinary criminals and the strong internal mores of Camorra clans.
    Keywords: experimental economics, economics of crime, models of identity, prisoner's dilemma, third party punishment
    JEL: A13 D63 D23 C92 K42 Z13
    Date: 2016–04
  3. By: Innocenti, Stefania (UNU‐MERIT, Maastricht University); Cowan, Robin (UNU‐MERIT, Maastricht University, and Beta, Universite de Strasbourg)
    Abstract: Institutions are the result of many individual decisions. Understanding how agents filter available information concerning the behaviour of others is therefore crucial. In this paper we investigate whether and how agents' self-efficacy beliefs affect mimetic behaviour and thus, implicitly the evolution of institutions. We propose an experimental task, which is a modified version of the two-armed bandit with finite time horizon. In the first treatment, we study in detail individual learning. In the second treatment, we measure how individuals use the information they gather while observing a randomly selected group leader. We find a negative relation between self-efficacy beliefs and the propensity to emulate a peer. This might ultimately affect the likelihood of institutional change.
    Keywords: Emulation, mimicry, laboratory experiment, self-efficacy, institutional change
    JEL: B52 C13 C91 D02 D03 D83
    Date: 2016–05–19
  4. By: Jacob LaRiviere (Department of Economics, University of Tennessee); Mikolaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Nick Hanley (Department of Geography and Sustainable Development, University of St. Andrews); Katherine Simpson (Economics Division, University of Stirling, Scotland)
    Abstract: This paper reports the results of a stated preference experiment designed to test for how information provided in a survey affects knowledge, and how knowledge affects preferences for a public good. A novel experimental design allows us to elicit subjects’ ex ante knowledge levels about a good’s attributes, exogenously vary how much new objective information about these attributes we provide to subjects, elicit subjects’ valuation for the good, and elicit posterior knowledge states about the same attributes. We find evidence of incomplete learning and fatigue: as subjects are told more information, their marginal learning rates decrease. We find there is no marginal impact of knowledge on the mean nor the variance of WTP for changes in the environmental good; but that ex ante knowledge does affect stated WTP. Our results are consistent with preference formation models of confirmation bias, costly search, or timing differences in learning and preference formation. Our results raise questions about the purpose and effects of providing information in stated preference studies.
    Keywords: Learning, Information, Behavioral Economics, Decision Making Under Uncertainty
    JEL: D83 D81 Q51
    Date: 2016
  5. By: Alain Cohn; Michel André Maréchal
    Abstract: Conceptual priming has become an increasingly popular tool in economics. Here, we review the literature that uses priming in incentivized experiments to study economic questions. We mainly focus on the role of social identity, culture, and norms in shaping preferences and behavior. We also discuss recently raised objections to priming research and conclude with promising avenues for future research.
    Keywords: Priming, experiment, identity, endogenous preferences
    JEL: C90 D03
    Date: 2016–04
  6. By: Erlei, Mathias; Roß, Wiebke
    Abstract: We provide experimental evidence for the hypothesis that bounded rationality is an important element of the theory of the firm. We implement a simplified version of a mechanism designed to perfectly solve the holdup problem under conditions of perfect rationality (Maskin 2002). We test whether this mechanism is able to perfectly solve our experimental holdup problem or may at least improve economic performance. We find that this is not the case: the implementation of the mechanism worsens economic performance. We reconstruct the main features of participants' behavior by applying the logit agent quantal response equilibrium (McKelvey and Palfrey 1998) as an equilibrium concept that takes players' potential mistakes into account.
    Keywords: bounded rationality,transaction costs,incomplete contracts,experiment,mechanism design
    JEL: D23 C92 L23
    Date: 2015
  7. By: Cedrini, Mario A.; Novarese, Marco
    Abstract: Until the advent of Behavioral and Neuroeconomics, Economics has generally tended to undervalue, on average, the importance of fear. Fear has traditionally been regarded as pertaining to an alternative domain with respect to rationality: it has thus been considered as triggering mechanism of anomalous, even irrational behavior. Conversely, the article speculates on the complexity of the concept of fear and of the social effects it is thought to produce. While discussing the eventual desirability of a freed-from-fear world and Western obsession with risk management and safety from the economic problem and other pressures, the paper provides a general introduction to the relevance of the relatively unexplored issue of fear to economics as discipline as well as to applied economics in public policy.
    Date: 2016–04

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