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on Cognitive and Behavioural Economics |
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Issue of 2016‒07‒30
six papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Maria De Paola; Francesca Gioia; Vincenzo Scoppa (Dipartimento di Economia, Statistica e Finanza, Università della Calabria) |
| Abstract: | We ran a field experiment to investigate whether competing in rank-order tournaments with different prize spreads affects individual performance. Our experiment involved students from an Italian University who took an intermediate exam that was partly evaluated on the basis of relative performance. Students were matched in pairs on the basis of their high school grades and each pair was randomly assigned to one of three different tournaments. Random assignment neutralizes selection effects and allows us to investigate if larger prize spreads increase individual effort. We do not find any positive effect of larger prizes on students’ performance and in several specifications we do find a negative effect. Furthermore, we show that the effect of prize spreads on students’ performance depends on their degree of risk-aversion: competing in tournaments with large spreads negatively affects the performance of risk-averse students, while it does not produce any effect on students who are more prone to take risks. |
| Keywords: | Rank-Order Tournaments, Incentives, Prize Spread, Risk-Aversion, Randomized Experiment |
| JEL: | J33 J31 J24 D81 D82 C93 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:clb:wpaper:201607&r=cbe |
| By: | Christoph Engel (MPI for Research on Collective Goods, Bonn); Oliver Kirchkamp (School of Economics and Business Administration, Friedrich-Schiller-University Jena) |
| Abstract: | We provide an example for an errors in variables problem which might be often neglected but which is quite common in lab experimental practice: In one task, attitude towards risk is measured, in another task participants behave in a way that can possibly be explained by their risk attitude. How should we deal with inconsistent behaviour in the risk task? Ignoring these observations entails two biases: An errors in variables bias and a selection bias. We argue that inconsistent observations should be exploited to address the errors in variables problem, which can easily be done within a Bayesian framework. |
| Keywords: | Risk, lab experiment, public good, errors in variables, Bayesian inference |
| JEL: | C91 D43 L41 |
| Date: | 2016–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2016-015&r=cbe |
| By: | Rodriguez-Lara, Ismael |
| Abstract: | This paper studies the extent to which offers and demands in ultimatum games are consistent with equity theory when there is a joint endowment to be distributed. Using a within-subject design, we also investigate the importance of the bargaining power by comparing the subjects’ behavior in the ultimatum and the no-veto-cost game, which differ in the possible cost of responders rejecting the proposers’ offer. Our findings suggest that proposers are willing to reward responders for their contribution to the joint endowment in any of the two games. As for responders, their behavior is consistent with equity theory only in the no-veto-cost game (in which a rejection is costless for them) when the game is first played. When the no-veto-cost game is played after the ultimatum game, we observe that the responders’ demands usually exceed their contribution to the endowment. Finally, this paper reports evidence that the ultimatum and the no-veto-cost game differ in terms of efficiency and rejection rates. |
| Keywords: | equity, fairness, bargaining power, ultimatum game, no-veto-cost game, joint production, efficiency, rejection rates. |
| JEL: | C91 D3 D6 D63 |
| Date: | 2016–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72700&r=cbe |
| By: | Hugo Bois |
| Abstract: | This paper discusses about a new framework to explain the decision-making process of modal choice. A specific approach, based on the behavioral framework developed by Ben-Akiva & Boccara (1987), is adopted to understand and analyze the decision processes of individuals. Precisely, we use the Analytic Hierarchy Process (AHP) to build the hierarchy of preferences from attitudes and perceptions. Through the preferences hierarchy, we can apply three different methods to better explain the decision processes; namely a standard compensatory model, a non-compensatory model based on the decision rules, and different possible weightings of the AHP method. The random utility maximization is predominantly used in the transportation literature because of its strong theoretical background, its success in predicting many types of human behavior, and the simplicity of mathematical and statistical analyses and model estimation it offers. Despite that, we believe that non-compensatory approaches are better suited to understand both travel behaviors and decision processes for transportation modes when taking active modes into account. These approaches allow us to better explain the impacts of each modal attributes on the one hand and to build psychological profiles with respect to decision rules on the other hand. Thus, it is possible to simulate shocks all things being equal. |
| Keywords: | Modal choice; Preferences; Decision rules; Hierarchical model; AHP. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2016-25&r=cbe |
| By: | T.K Ahn; Loukas Balafoutas; Mongoljin Batsaikhan; Francisco Campos Ortiz; Louis Putterman; Matthias Sutter |
| Abstract: | A vibrant literature has emerged in recent years to explore the influences of human evolution and the genetic composition of populations on the comparative economic performance of societies, highlighting the roles played by the Neolithic Revolution and the prehistoric “out of Africa” migration of anatomically modern humans in generating worldwide variations in the composition of genetic traits across populations. The recent attempt by Nicholas Wade’s A Troublesome Inheritance: Genes, Race and Human History to expose the evolutionary origins of comparative economic development to a wider audience provides an opportunity to review this important literature in the context of his theory. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:bro:econwp:2016-5&r=cbe |
| By: | Chen, Daniel L. |
| Abstract: | Some theories about the positive impact of markets on morality suggest that competition increases empathy, not between competitors, but between them and third parties. However, empathy may be a necessary evolutionary antecedent to guile, which is when someone knows what the other person wants and intentionally deceives him or her, and deception may have evolved as a means of exploiting empathy. This paper examines how individuals primed for empathy behave towards third parties in a simple economic game of deception. It reports the results of a data entry experiment in an online labor market. Individuals enter data randomized to be a prime for empathy, for guile, or a control. Empathy is then measured using a Reading the Mind in the Eyes Test and guile is measured using a simple economic game. Individuals primed for empathy become less deceptive towards third parties. Individuals primed for guile become less likely to perceive that deceiving an individual is unfair in a vignette. These results are robust to a variety of controls and to restricting to workers who entered the prime accurately. These findings are inconsistent with the hypothesis that empathy causes guile and suggests that empathy may cause those who are making judgements to become less deceptive. |
| Keywords: | Normative Commitments, Other-Regarding Preferences, Empathy, Deception, Guile |
| JEL: | D03 D64 K00 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:30579&r=cbe |