nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2016‒07‒02
seven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Under Uncertainty, Over Time and Regarding Other People: Rationality in 3D By Dorian Jullien
  2. Cognitive Ability and Games of School Choice By Christian, Basteck; Marco, Mantovani
  3. Because of you I did not give up - How peers affect perseverance By Gerhards, Leonie; Gravert, Christina
  4. Institutionalize reciprocity to overcome the public goods provision problem By Hiroki Ozono; Yoshio Kamijo; Kazumi Shimizu
  5. Looking Good and Looking Smart By Olivier Gergaud; Victor Ginsburgh; florine f. Livat
  6. Feedback and consumption behavior By Sandro Casal; Nives Della Valle; Luigi Mittone; Ivan Soraperra
  7. The affective dynamics of hedonic versus healthy food choices: Making salient post-consumption affect promotes healthy food choices By Claudia Toma; Marcel Zeelenberg; Olivier Corneille

  1. By: Dorian Jullien (University of Nice Sophia Antipolis; GREDEG CNRS)
    Abstract: This paper scrutinizes behavioral economics' challenges to the standard accounts of economic behaviors within and across three dimensions: under uncertainty, over time and regarding other people. ‘Within' dimensions means that decision problems are of the form, e.g., ‘a consequence for sure vs. a bigger consequence with uncertainty' or ‘a consequence now vs. a bigger consequence later', by contrast with decision problems that cut ‘across' dimensions as in, e.g., ‘a consequence for sure but later vs. another consequence now but with uncertainty'. The proposed distinction between challenges within and across dimensions is more than conceptual, it also delimits a historical rupture between two periods that are nontrivial regarding the debates between behavioral and standard economics. The classical challenges posed by Kahneman, Tversky, Thaler and others focused on interactions within dimensions, posing problems to standard models. The more recent challenges from interactions across dimensions are posing problems to to both standard and behavioral economists' models. This paper proposes a systematic contrasts between the three dimensions, in both the challenges within and across the three dimensions, i.e., it proposes to ‘see rationality in 3D', in order to further our understanding of the contemporary theoretical, empirical and methodological stakes underlying these debates. Three methodological issues are discussed throughout: one that is not discussed elsewhere in the reflexive literature, namely the role of language in economic rationality, which we try to connect with the two classical ones around behavioral economics, namely, the issue of interdisciplinary between economics and psychology and the positive/normative issue within models of individual behaviors. With respect to the latter, we suggest that there is a slow historical shift from a primacy of risk over time over social preferences in the making of economists' value judgments of rationality and irrationality, to a competing primacy of time over risk over social preferences.
    Keywords: behavioral economics, economic rationality, expected utility, prospect theory, exponential discounting, hyperbolic discounting, self-interest, other-regarding behaviors, economic methodology, history of economics
    JEL: A12 B21 B41 D01 D03 D81 D90 D64
    Date: 2016–06
  2. By: Christian, Basteck; Marco, Mantovani
    Abstract: We take school admission mechanisms to the lab to test whether the manipulable Boston mechanism disadvantages students of lower cognitive ability and whether this leads to ability segregation across schools. Results show this is the case: lower ability participants receive a lower average payoff and are over-represented at the worst school. Under the strategy-proof Deferred Acceptance mechanism, payoff differences between high and low ability participants are reduced, and distributions by ability across schools are harmonized. Hence, we find support for the argument that a move to strategy-proof mechanisms would “level the playing field†. However, we document a trade-off between equality and efficiency in the choice of school admission mechanisms since average payoffs are larger under Boston than under Deferred Acceptance.
    Keywords: laboratory experiment, school choice, strategy-proofness, cognitive ability, mechanism design
    JEL: C78 C91 D82 I24
    Date: 2016–06–21
  3. By: Gerhards, Leonie (Department of Economics, University of Hamburg); Gravert, Christina (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Various empirical papers have shown that peers affect productivity and behavior in the workplace. However, the mechanisms through which peers influence each other are still largely unknown. In this laboratory experiment we study a situation in which individuals might look at their peers' behavior to motivate themselves to endure in a task that requires perseverance. We test the impact of unidirectional peer effects under individual monetary incentives, controlling for ability and tactics. We find that peers significantly increase their observers' perseverance, while knowing about being observed does not significantly affect behavior. In a second experiment we investigate the motives to self-select into the role of an observing or an observant subject and what kind of peers individuals deliberately choose. Our findings provide first insights on the perception of peer situations by individuals and new empirical evidence on how peer groups emerge.
    Keywords: grit; perseverance; laboratory experiment; peer effects; real effort
    JEL: C91 D03 J24 M50
    Date: 2016–06
  4. By: Hiroki Ozono (Kagoshima University); Yoshio Kamijo (School of Economics and Management, Kochi University of Technology); Kazumi Shimizu (Waseda University)
    Abstract: Cooperation is fundamental to human societies, and one of the important paths for its emergence and maintenance is reciprocity. In prisoner's dilemma (PD) experiments, reciprocal strategies are often effective at attaining and maintaining high cooperation. In many public goods (PG) games or n-person PD experiments, however, reciprocal strategies are not successful at engendering cooperation. In the present paper, we attribute this difficulty to a coordination problem against free riding among reciprocators: Because it is difficult for the reciprocators to coordinate their behaviors against free riders, this may lead to inequality among players, which will demotivate them from cooperating in future rounds. We propose a new mechanism, institutionalized reciprocity (IR), which refers to embedding the reciprocal strategy as an institution (i.e., institutionalizing the reciprocal strategy). We experimentally demonstrate that IR can prevent groups of reciprocators from falling into coordination failure and achieve high cooperation in PG games. In conclusion, we argue that a natural extension of the present study will be to investigate the possibility of IR to serve as a collective punishment system.
    Keywords: cooperation, public goods game, laboratory experiment, institutionalized reciprocity, raise the stakes strategy
    JEL: C72 C91 C92 M54
    Date: 2015–07
  5. By: Olivier Gergaud; Victor Ginsburgh; florine f. Livat
    Abstract: We analyze the link existing between perceived intelligence and perceived beauty. Here, perceived beauty encompasses a set of personal characteristics as suggested by Hakim’s (2010) erotic capital that allows to consider human capital in a broad sense including several dimensions of attractiveness and attitude and not only facial cues. The analysis is based on original survey data collected and compiled by Epoll Market Research that provides thorough information on how 3,620 American celebrities are perceived by a representative sample of the American population. These celebrities are prominent people in fields like cinema, sports, music, business, politics, etc. We correlate intelligence scores with scores on eleven available physical attributes linked with physical beauty (attractive, beautiful, charming, classy, cute, exciting, glamorous, handsome, physically fit, sexy, and stylish). Results show that being judged classy or charming is positively associated with intelligence whereas looking cute, physically fit, or sexy sends a negative signal about cognitive skills. Since pictures of celebrities are also shown (at random) at half of the participants of the surveys, we can also draw causal inferences on how this “natural experiment” changes perception and correlations.
    Keywords: perceived beauty cues; perceived intelligence; celebrities; natural experiment; survey data
    JEL: J24
    Date: 2016–06
  6. By: Sandro Casal; Nives Della Valle; Luigi Mittone; Ivan Soraperra
    Abstract: Field studies suggest that feedback is an effective tool for promoting efficient consumption. Feedback enhances consumers’ awareness of the consequences associated with consumption of those goods, such as energy, that are usually consumed indirectly and unconsciously. Yet, variations in methodologies and weaknesses of internal control in the literature studying the effect of feedback on efficient consumption make it difficult to draw general conclusions. Our study aims to isolate the mechanisms underlying the effect of feedback on consumption in a controlled environment with a neutral language. We design a laboratory experiment in which individuals are not aware of the consequences of their consumption decisions and, thus, cannot easily identify the optimal ones. We introduce feedback as a mechanism to enhance awareness of consumption consequences. We assess the efficacy of different types of feedback that include descriptive norms and framing effects to enhance search of optimal consumption. We find that feedback is most effective when we introduce a negative frame. On the contrary, feedback reduces efficiency when we introduce information about peers’ inefficient behavior. Our study quantifies the effect of different types of feedback and suggests useful insights for policy makers.
    Keywords: Feedback, Consumption, Laboratory Experiment
    JEL: C91 D12 Q41
    Date: 2016
  7. By: Claudia Toma; Marcel Zeelenberg; Olivier Corneille
    Abstract: This research provides original evidence for the impact of anticipated affects on hedonic versus healthy food choices. Study 1 and 2 reveal the asymmetric affective dynamics of hedonic and healthy food choices and pave the way for our behavioral prediction: People anticipate more instant than post-consumption satisfaction when choosing hedonic over healthy food, whereas they anticipate more post-consumption than instant satisfaction when choosing healthy over hedonic food. In Study 3, the experiment proper, we further find that orienting people’s attention on immediate post-consumption affects helps them redirecting their choice towards a more healthy food option. These findings suggest that a simple affectfocused manipulation may prove very effective in increasing healthier choices. The role of anticipated affect in inter-temporal choices is discussed.
    Keywords: affective dynamics; food choices; post-consumption satisfaction
    JEL: I00
    Date: 2016–06–07

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