nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2016‒08‒14
three papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Cognitive Droughts By Lichand, Guilherme; Mani, Anandi
  2. “Know Your Status”: The Impact of HIV testing on Time and Risk Preferences and the Implications for Behaviour By Catherine Jury
  3. Learning to Coordinate: Co-Evolution and Correlated Equilibrium By Alejandro Lee-Penagos

  1. By: Lichand, Guilherme (Harvard University); Mani, Anandi (University of Warwick)
    Abstract: This paper tests whether uncertainty about future rainfall affects farmers’ decision-making through cognitive load. Behavioral theories predict that rainfall risk could impose a psychological tax on farmers, leading to material consequences at all times and across all states of nature, even within decisions unrelated to consumption smoothing, and even when negative rainfall shocks do not materialize down the line. Using a novel technology to run lab experiments in the field, we combine survey experiments with recent rainfall shocks to test the effects of rainfall risk on farmers’ cognition, and find that it decreases farmers’ attention, memory and impulse control, and increases their susceptibility to a variety of behavioral biases. Effects are quantitatively important, equivalent to losing 25% of one’s harvest at the end of the rainy season. Evidence that farmer’s cognitive performance is relatively less impaired in tasks involving scarce resources suggests that the effects operate through the mental bandwidth mechanism.
    Keywords: JEL Classification:
    Date: 2016
  2. By: Catherine Jury
    Abstract: It has been suggested that voluntary counselling and testing (VCT) may help to reduce the transmission of HIV. Although evidence in support of this claim is mixed, little is known about the channels through which VCT may affect sexual decision-making. The purpose of this study is to test whether learning one’s HIV status has an impact on risky sexual behaviour through the channel of time and risk preferences. Using data from the Malawi Longitudinal Study of Families and Health (MLSFH), the impact of learning HIV results on these preferences, two years ex post, is measured. Secondly, the role of VCT and time and risk preferences in explaining risky sexual behaviour is analysed. Potential endogeneity problems associated with self-selection into learning results and reverse causality between learning results and preferences are overcome by use of an IV strategy. Randomly assigned vouchers to collect results as well as distance to VCT centres are used as instrumental variables for VCT attendance. Difference-in-difference methodology is used to test robustness of the results. Findings indicate little evidence of an enduring impact of VCT on time and risk preferences and risky sexual behaviour. Furthermore, results suggest that preferences are, on average, not a channel through which VCT affects behaviour. Thus, although VCT may affect sexual decision-making in the short-run, as found in some previous studies, such effects may significantly diminish over time and are likely not via the channel of altered preferences for time and risk.
    Keywords: HIV/AIDS; Voluntary Counselling and Testing; Risk Aversion; Time Preference
    JEL: D83 D90 I12 I18
    Date: 2016
  3. By: Alejandro Lee-Penagos (School of Economics, University of Nottingham)
    Abstract: In a coordination game such as the Battle of the Sexes, agents can condition their plays on external signals that can, in theory, lead to a Correlated Equilibrium that can improve the overall payoffs of the agents. Here we explore whether boundedly rational, adaptive agents can learn to coordinate in such an environment. We find that such agents are able to coordinate, often in complex ways, even without an external signal. Furthermore, when a signal is present, Correlated Equilibrium are rare. Thus, even in a world of simple learning agents, coordination behavior can take on some surprising forms.
    Keywords: Battle of the Sexes, Correlated Equilibrium, Evolutionary Game Theory, Learning Algorithms, Coordination Games, Adaptive Agents
    Date: 2016–11

This nep-cbe issue is ©2016 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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