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on Cognitive and Behavioural Economics |
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Issue of 2016‒10‒02
ten papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Quang Nguyen (Middlesex University [London] - Middlesex University); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Hui Xu (Beijing Normal University, GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence. (Arrow 1972) |
| Keywords: | risk preferences, time preferences, Cumulative Prospect Theory, Vietnam, field experiment, trustworthiness,trust |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01300735&r=cbe |
| By: | Ma-Kellams, Christine (University of La Verne); Lerner, Jennifer S. (Harvard University) |
| Abstract: | Cultivating successful personal and professional relationships requires the ability to accurately infer the feelings of others--i.e., to be empathically accurate. Some are better than others at this, which may be explained by mode of thought, among other factors. Specifically, it may be that empathically-accurate people tend to rely more on intuitive rather than systematic thought when perceiving others. Alternatively, it may be the reverse--that systematic thought increases accuracy. In order to determine which view receives empirical support, we conducted four studies examining relations between mode of thought (intuitive versus systematic) and empathic accuracy. Study 1 revealed a lay belief that empathic accuracy arises from intuitive modes of thought. Studies 2-4, each using executive-level professionals as participants, demonstrated that (contrary to lay beliefs) people who tend to rely on intuitive thinking also tend to exhibit lower empathic accuracy. This pattern held when participants inferred others' emotional states based on (a) in-person face-to-face interactions with partners (Study 2) as well as on (b) pictures with limited facial cues (Study 3). Study 4 confirmed that the relationship is causal: experimentally inducing systematic (as opposed to intuitive) thought led to improved empathic accuracy. In sum, evidence regarding personal and social processes in these four samples of working professionals converges on the conclusion that--contrary to lay beliefs --empathic accuracy arises more from systematic thought than from gut intuition. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:16-017&r=cbe |
| By: | Alger, Ingela; Weibull, Jörgen |
| Abstract: | Since the publication of Adam Smithís Wealth of Nations, it has been customary among economists to presume that economic agents are purely selfinterested. However, research in experimental and behavioral economics has shown that human motivation is more complex and that observed behavior is often better explained by additional motivational factors such as a concern for fairness, social welfare etc. As a complement to that body of work we have carried out theoretical investigations into the evolutionary foundations of human motivation (Alger and Weibull 2013, 2016). We found that natural selection, in starkly simpliÖed but mathematically well-structured environments, favors preferences that combine self-interest with morality. Roughly speaking, the moral component evaluates oneís own action in terms of what would happen, if, hypothetically, this action were adopted by others. Such moral preferences have important implications for economic behavior. They motivate individuals to contribute to public goods, to give fair o§ers when they could get away with cheap o§ers, and to contribute to social institutions and act in environmentally friendly ways even if their individual impact is negligible. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:31011&r=cbe |
| By: | Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique); Nicolas Jacquemet (PSE - Paris School of Economics); Stéphane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales - Université Paul Cézanne - Aix-Marseille 3 - Université de la Méditerranée - Aix-Marseille 2 - CNRS - Centre National de la Recherche Scientifique); Adam Zylbersztejn (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon) |
| Abstract: | Dominance solvability is one of the most straightforward solution concepts in game theory. It is based on two principles: dominance (according to which players always use their dominant strategy) and iterated dominance (according to which players always act as if others apply the principle of dominance). However, existing experimental evidence questions the empirical accuracy of dominance solvability. In this study, we study the relationships between the key facets of dominance solvability and two cognitive skills, cognitive reection and uid intelligence. We provide evidence that the behaviors in accordance with dominance and one-step iterated dominance are both predicted by one's uid intelligence rather than cognitive reection. Individual cognitive skills, however, only explain a small fraction of the observed failure of dominance solvability. The accuracy of theoretical predictions on strategic decision making thus not only depends on individual cognitive characteristics, but also, perhaps more importantly, on the decision making environment itself. |
| Keywords: | Raven's test,experiment,Dominance solvability,cognitive skills,CRT |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01359231&r=cbe |
| By: | Laurent Denant-Boemont (CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique); Enrico Diecidue (INSEAD - INSEAD); Olivier L'Haridon (CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We present experimental evidence regarding individual and group decisions over time. Static and longitudinal methods are combined to test four conditions on time preferences: impatience, stationarity, age independence, and dynamic consistency. Decision making in groups should favor coordination via communication about voting intentions. We find that individuals are neither patient nor consistent, that groups are both patient and highly consistent, and that information exchange between participants helps groups converge to stable decisions. Finally we provide additional evidence showing that our results are driven by the specific role of groups and not by either repeated choices or individual preferences when choosing for other subjects. |
| Keywords: | Time Preferences,Dynamic Consistency,present-bias,Group Decisions |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01306949&r=cbe |
| By: | Krzysztof Kontek; Michael Birnbaum |
| Abstract: | This paper presents the results of two experiments that exhibit monotonicity violations: some lotteries with three equally likely outcomes are valued more than a superior two-outcome lottery, while others are valued less than an inferior two-outcome lottery. Moreover the experimental data provide compelling evidence that lottery valuation strongly depends on the value(s) of the middle outcome(s). This contradicts the claim of Cumulative Prospect Theory (CPT) that middle outcomes are assigned lower weights than the extreme ones. Both effects can be observed in the case of four-outcome lotteries. The patterns are persistent for various payoff schedules, and have been observed for subjects from both Poland and California. Incorporating the median outcome value into any modeling of risky decision-making enables these effects to be explained. This paper demonstrates that a simple weighted Expected Utility - Median model describes data involving two- three-, and four-outcome lotteries more accurately than CPT. Moreover, it offers an alternative explanation of ''overweighting'' of small probabilities, and ''underweighting'' of large ones – phenomena postulated by CPT. |
| Keywords: | decision – making under risk, monotonicity violations, Expected Utility Theory (EUT), Cumulative Prospect Theory, median |
| JEL: | D81 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:sgh:kaewps:2016016&r=cbe |
| By: | Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique); Nicolas Jacquemet (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stéphane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales - Université Paul Cézanne - Aix-Marseille 3 - Université de la Méditerranée - Aix-Marseille 2 - CNRS - Centre National de la Recherche Scientifique); Adam Zylbersztejn (GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | How is one's cognitive ability related to the way one responds to strategic uncertainty? We address this question by conducting a set of experiments in simple 2 × 2 dominance solvable coordination games. Our experiments involve two main treatments: one in which two human subjects interact, and another in which one human subject interacts with a computer program whose behavior is known. By making the behavior of the computer perfectly predictable, the latter treatment eliminates strategic uncertainty. We find that subjects with higher cognitive ability are more sensitive to strategic uncertainty than those with lower cognitive ability. |
| Keywords: | Strategic uncertainty,Bounded rationality,Robot,Experiment |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01261036&r=cbe |
| By: | Zaunbrecher, Henrik (General Economics 1 (Micro)); Riedl, Arno (General Economics 1 (Micro)) |
| Abstract: | Social identity has been shown to successfully enhance cooperation and effort in cooperation and coordination games. Little is known about the causal effect of social identity on the propensity to engage in group conflict. In this paper we explore theoretically and experimentally whether social identity increases investments in group contests. We show theoretically that increased social identity with the own group implies higher investments in Tullock contests. Empirically we find that induced social identity does increase group closeness but does not increase conflict investments. |
| Keywords: | social identity, group, contest, experiment |
| JEL: | C92 D03 D71 D74 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2016024&r=cbe |
| By: | Gill, Brian P. (Mathematica Policy Research); Lerner, Jennifer S. (Harvard University); Meosky, Paul (Harvard University) |
| Abstract: | The primary lever American policymakers have used to improve school performance is "accountability" in the form of high-stakes testing. But the behavioral literature, overlooked in the education policy debate, shows that accountability exists in a variety of forms that evoke different psychological mechanisms and can have positive or negative effects. Examining the psychological/behavioral literature alongside the education literature, we identify four forms of accountability relevant to K-12 schooling: outcome-based (high-stakes testing), rule-based, market-based, and professional accountability. Promoting continuous improvement in schools is likely to require multiple forms of accountability that not only offer rewards and sanctions but also increase the transparency of educational practice and provide mechanisms for improving practice. This suggests that professional accountability--which has historically been underutilized in schools--merits particular attention. |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:16-018&r=cbe |
| By: | Francesco Cerigioni |
| Abstract: | Evidence from cognitive sciences shows that some choices are conscious and reflect individual preferences while others tend to be intuitive, driven by analogies with past experiences. Under these circumstances, usual economic modeling might not be valid because not all choices are the consequence of individual tastes. We here propose a behavioral model that can be used in standard economic analysis that formalizes how conscious and intuitive choices arise by presenting a decision maker composed by two systems. One system compares past decision problems with the one the decision maker faces, and it replicates past behavior when the problems are similar enough (Intuitive choices). Otherwise, a second system is activated and preferences are maximized (Conscious choices). We then present a novel method capable of finding conscious choices just from observed behavior and finally, we provide a choice theoretical foundation of the model and discuss its importance as a general framework to study behavioral inertia. |
| Keywords: | Dual Processes, Fast and Slow Thinking, Similarity, Revealed Preferences, memory, Intuition |
| JEL: | D01 D03 D60 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:924&r=cbe |