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on Cognitive and Behavioural Economics |
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Issue of 2016‒10‒30
eleven papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Mastrogiorgio, Antonio; Petracca, Enrico |
| Abstract: | The current notions of bounded rationality in economics share distinctive features with Simon’s original notion, which still influences the theoretical and experimental research in the fields of choice, judgment, decision making, problem solving, and social cognition. All these notions of bounded rationality are in fact equally rooted in the information-processing approach to human cognition, expressing the view that reasoning is disembodied and that it can be reduced to the processing of abstract symbolic representations of the environment. This is in contrast with the last three-decade advancements in cognitive psychology, where a new view on human cognition has emerged under the general label of ‘embodied cognition’, demonstrating that cognition and reasoning are grounded in the morphological traits of the human body and the sensory-motor system. In this paper we argue that embodied cognition might reform the current notions of bounded rationality and we propose a number of arguments devoted to outline a novel program of research under the label of ‘embodied rationality’: (1) reasoning is situated as it arises from the ongoing interaction between the subject and the environment; (2) reasoning, not being exclusively a mental phenomenon, constitutively relies on the physical resources provided by the environment; (3) the sensory-motor system provides the building blocks for abstract reasoning, (4) automatic thinking is rooted in the evolutionary coupling between the morphological traits of the human body and the environment. |
| Keywords: | Bounded rationality; embodied cognition; Herbert A. Simon; ecological rationality; heuristics and biases |
| JEL: | A12 B40 D03 D04 D80 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74658&r=cbe |
| By: | Yoshio Kamijo (School of Economics and Management, Kochi University of Technology); Teruyuki Tamura (School of Economics and Management, Kochi University of Technology) |
| Abstract: | This study examines whether attitudes toward risk and altruism are affected by being in a group or being alone. Subjects in our experiment were requested only to show their faces to other members without any further communication, differing from previous studies. In experiments of both anonymous investments and donations, we found that subjects who made decisions in a group offered significantly lower amounts than individuals who made decisions alone, even controlling for individuals' risk and altruistic preferences. Our results indicate that people are more risk averse and self-interested when they are in a group. |
| Keywords: | Group decision, Altruism, Decision under risk |
| JEL: | C91 C92 D81 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2016-12&r=cbe |
| By: | Seeun Jung (ESSEC Business School - Essec Business School, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Radu Vranceanu (Economics Department - Essec Business School) |
| Abstract: | This paper reports results from a real-e ort experiment in which men and women are paired to form a two-member team and asked to execute a real-eff ort task. Each participant receives an equal share of the team's output. Workers who perform better than their partner can punish him/her by imposing a fi ne. We manipulate the teams' gender composition (man-man, man-woman, and woman-woman) to analyze whether an individual's performance and sanctioning behavior depends on his/her gender and the gender interaction within the team. The data show that, on average, men perform slightly better than women. A man's performance will deteriorate when paired with a woman, while a woman's performance will improve when paired with a woman. When underperforming, women are sanctioned more often and more heavily than men; if sanctioned, men tend to improve their performance, while women's performance does not change. |
| Keywords: | Gender studies,Real-e ort task,Team production,Performance,Punishment,Discrimination |
| Date: | 2015–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01171161&r=cbe |
| By: | Wälde, Klaus (University of Mainz); Moors, Agnes (KU Leuven) |
| Abstract: | Positive and negative feelings were central to the development of economics, especially in utility theory in classical economics. While neoclassical utility theory ignored feelings, behavioral economics more recently reintroduced feelings in utility theory. Beyond feelings, economic theorists use full-fledged specific emotions to explain behavior that otherwise could not be understood or they study emotions out of interest for the emotion itself. While some analyses display a strong overlap between psychological thinking and economic modelling, in most cases there is still a large gap between economic and psychological approaches to emotion research. Ways how to reduce this gap are discussed. |
| Keywords: | emotions, decision making, theory |
| JEL: | A12 B0 D03 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10261&r=cbe |
| By: | Nobuyuki Hanaki (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales); Nicolas Jacquemet (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, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)); Stéphane Luchini (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales); 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 abilities are more sensitive to strategic uncertainty than those with lower cognitive abilities. |
| Keywords: | strategic uncertainty,robot,bounded rationality,experiment |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01095897&r=cbe |
| By: | Morone, Andrea; Temerario, Tiziana |
| Abstract: | We analysed dyads strategies in one-shot public goods game. By means of a laboratory experiment, using a variant of the strategy-method, we found that more than one third of the dyads are conditional cooperators, whereas 18% can be categorised as free riders. |
| Keywords: | Voluntary contributions; Conditional cooperation; Free riding; Strategy-method; Experiments; |
| JEL: | C91 C92 H41 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74732&r=cbe |
| By: | Ariane Lambert-Mogiliansky (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); François Dubois (CNAM Paris - Conservatoire National des Arts et Métiers - Paris - Conservatoire National des Arts et Métiers [CNAM], LM-Orsay - Laboratoire de Mathématiques d'Orsay - CNRS - Centre National de la Recherche Scientifique - UP11 - Université Paris-Sud - Paris 11) |
| Abstract: | In this paper we investigate the implications of assuming that citizens are cognitively constrained for transparency in public life. We model cognitive limitations as reflecting a quantum property of people’s mental representations of the world. There exists a multiplicity of incompatible (Bohr) complementary mental representations of a situation. As a consequence the framing of information plays a crucial role. We show that additional information can be detrimental to a quantum cognitively constrained agent: he may become more confused. We suggest some implications for the design of a public agency’s website. |
| Keywords: | Learning,Quantum cognition,Transparency |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01064980&r=cbe |
| By: | Marie Boltz (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Karine Marazyan (IEDES); Paola Villar (INED - Institut national d'études démographiques, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics) |
| Abstract: | Informal redistribution play a preponderant role in individual risk management in developing economies. However, strategies to reduce the pressure to redistribute are rather widespread and often costly, while under-explored in the economic literature. In this paper, we identify the potentially distortionary effects of informal redistribution on individual resource allocation choices, through exogenous variations on one hand of the share of unobservable income and on the other hand, of the pool of observers. For this, we conducted an original experiment combining both a lab-in-the-field and a randomized controlled trial in poor urban communities in Senegal on a randomly selected sample. A first contribution of the paper is to elicit in the lab the willingness-to-pay to hide one’s lab lottery gains from kin and neighbors. Second, we estimate the impact of the non-observability of this windfall income on resource allocation decisions of participants out of the lab. We find a high willingness-to-pay for hiding: 65% of subjects prefer to receive their gains in private rather than in public and among them, they are ready to forgo on average 14.3% of their unobserved income for the privacy option. Also, we find that the determinants of the willingness-to-pay to hide income while correlated with redistributive pressure differ across gender. Moreover, while lottery public winners are found to spend 22% of their windfall income on transfers to kin, lottery private winners showing preferences for hidden income transfer 24% less and reallocate this extra money in health and private expenditures. |
| Keywords: | informal redistribution,income observability,intra-family resource allocations,lab experiment in the field,Sub-Saharan Africa |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01157710&r=cbe |
| By: | Glenn Dutcher; Daniela Glätzle-Rützler; Dmitry Ryvkin |
| Abstract: | Contests are meant to attract the best performers and incentivize high effort, however, they may also attract cheaters who try to win via illicit means which crowds out the best performers. We use a laboratory experiment to explore the role of self-selection in contests with a possibility of lying in a real effort task. Contrary to common wisdom, we do not find evidence that contests disproportionately attract intrinsic cheaters. However, we find that contests fail at selecting the best performers, as no difference is observed in the actual or perceived ability of those who selected into the contest versus those who selected into a comparable noncompetitive pay scheme. Classification-JEL: D02, K42, M52, C90 |
| Keywords: | contest, cheating, entry, experiment |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2016-29&r=cbe |
| By: | Rommel, Jens; Hermann, Daniel; Müller, Malte; Mußhoff, Oliver |
| Abstract: | Farmers face many risks in economic decision-making. Therefore, understanding farmers’ risk attitudes is important to support decision-making and policy. Economic experiments have become popular to elicit farmers’ risk preferences. However, previous research is inconclusive about the power of simple lotteries or survey questions to predict actual behavior of farmers. In this paper, we experimentally compare the predictive power of four different lottery tasks. In a 2 x 2 full factorial experimental design, we compare the effect of framing the task in an agricultural context vs. an abstract task, as well as the effect of incentivizing the lottery vs. not using monetary incentives. We also introduce three survey items that ask respondents to rank their risk attitude in different domains. We compare these measures against a benchmark of actual risk management instruments farmers are using. An incentivized lottery without contextual framing triggers most risk-seeking behavior among farmers. However, all four lotteries and three survey-based measures correlate only poorly with the use of actual risk management instruments such as hail insurance. Our findings cast doubt on the predictive power of commonly used risk elicitation instruments. Additional methods are necessary to establish greater external validity in the elicitation of farmers’ risk attitudes. |
| Keywords: | Experimental economics, external validity, farmers, risk attitudes., Farm Management, Risk and Uncertainty, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:gewi16:244759&r=cbe |
| By: | Bauermeister, Golo-Friedrich; Mußhoff, Oliver |
| Abstract: | In the past decade, many studies have measured individual risk attitude with different elicitation methods using within-subject design and have found significant disparities across the elicitation methods. According to the existing literature, there are also differences in the observed understanding of the elicitation methods measured by the inconsistency rate. However, there are no studies yet that compares the inconsistency rate across different elicitation methods in a within-subject design. Therefore, we compare both the inconsistency rate and the risk attitude of participants in two different lottery tasks in a within-subject design, namely the lottery task by Holt and Laury (2002) as well as the one by Brick, Visser and Burns (2012). Moreover, we analyze in a between-subject design whether a visualization of a lottery task for a better understanding results in differences in the elicited risk attitude and thus leads to the desired reduction of the inconsistency rate. Results show that the elicited risk attitudes are more risk averse in the more complex Holt-and-Laury task in both display formats. Moreover, we find that the visualization results in more risk averse responses in both lottery tasks. According to the inconsistency rate, we find that the Brick-Visser-Burns task is better understood than the Holt-and-Laury task, especially in the textual display format. Furthermore, the visual display format of the Holt-and-Laury task results in a significantly better understanding compared to the textual display format. Submitted File(s) History of Uploads |
| Keywords: | Brick-Visser-Burns task, display formats, Holt-and-Laury task, inconsistency rate, risk attitude, Risk and Uncertainty, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:gewi16:244764&r=cbe |