nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2016‒11‒20
eleven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. The Interaction between Prosocial (Giving) Behaviours and Social Cohesion By Lorna Zischka
  2. Payment behaviour: the role of socio-psychological factors By Carin van der Cruijsen; Frank van der Horst
  3. What Grades and Achievement Tests Measure By Borghans, Lex; Golsteyn, Bart H.H.; Heckman, James J.; Humphries, John Eric
  4. Flip a coin or vote : an Experiment on choosing group decision By Hoffmann, Timo; Renes, Sander
  5. Price Discrimination with Loss Averse Consumers By Jong-Hee Hahn; Jinwoo Kim; Sang-Hyun Kim; Jihong Lee
  6. Social comparison nudges: Guessing the norm increases charitable giving By Bartke, Simon; Friedl, Andreas; Gelhaar, Felix; Reh, Laura
  7. The Bomb-Crater Effect of Tax Audits: Beyond Misperception of Chance By Luigi Mittone; Fabrizio Panebianco; Alessandro Santoro
  8. Individual vs. Group Decision Making: an Experiment on Dynamic Choice under Risk and Ambiguity By Konstantinos Georgalos; Enrica Carbone; Gerardo Infante
  9. Testing the Advantages of Conscious vs. Unconscious Thought for Complex Decisions in a Distraction Free Paradigm By McElroy, Todd; Dickinson, David L.
  10. Gender and cooperative preferences on five continents By Furtner, Nadja C.; Kocher, Martin G.; Martinsson, Peter; Matzat, Dominik; Wollbrant, Conny
  11. Giving in the Face of Risk By Cettolin, Elena; Riedl, Arno; Tran, Thu Giang

  1. By: Lorna Zischka (Department of Economics, University of Reading)
    Abstract: A controlled experiment establishes that differences in relational proximity can evoke or suppress a willingness to give to an unrelated cause. Four treatment groups underwent the same set of exercises but two in a closer relational environment and two in a more distant relational environment. Half of the subjects in each relational environment further received an unannounced doubling of pay. On exit, all participants had the option to give to charity. The experiment showed that the charitable giving was driven by relational factors, not by pay. We can learn that pro-social (pro-giving) inclinations interact with the wider social environment, and that these complex relational parameters may be evaluated by easy-to-measure giving patterns.
    Keywords: giving, experiment, pro-social, charity, endowment, social capital
    Date: 2016–07–03
  2. By: Carin van der Cruijsen; Frank van der Horst
    Abstract: This research examines the effects of socio-psychological factors on consumers' payment behaviour. Based on insights from the socio-psychological and payment literature we build a theoretical model of payment behaviour. We test this model empirically by focussing on the choice between cash and electronic payments, and by using the outcomes of two specially constructed surveys of a representative panel of Dutch consumers. We are significantly better able to explain payment behaviour than traditional payment models. Moreover, we provide useful insights for those who want to understand and steer payment behaviour. Consumers' payment attitudes depend on perceptions of attributes, such as safety and acceptance. Together with social norms, roles, emotions, and perceived control, these attitudes drive payment intentions. Although payment intentions are the key determinant of payment behaviour, payment habits also play an important role in explaining how consumers pay.
    Keywords: payment behaviour; attitude; intention; socio-psychological model; consumer survey; habit; social norms; personal norm; role; control; emotions
    JEL: D14 D11 D03 Z13
    Date: 2016–11
  3. By: Borghans, Lex (Maastricht University); Golsteyn, Bart H.H. (Maastricht University); Heckman, James J. (University of Chicago); Humphries, John Eric (University of Chicago)
    Abstract: Intelligence quotient (IQ), grades, and scores on achievement tests are widely used as measures of cognition, yet the correlations among them are far from perfect. This paper uses a variety of data sets to show that personality and IQ predict grades and scores on achievement tests. Personality is relatively more important in predicting grades than scores on achievement tests. IQ is relatively more important in predicting scores on achievement tests. Personality is generally more predictive than IQ of a variety of important life outcomes. Both grades and achievement tests are substantially better predictors of important life outcomes than IQ. The reason is that both capture personality traits that have independent predictive power beyond that of IQ.
    Keywords: IQ, achievement tests, grades, personality traits
    JEL: J24 D03
    Date: 2016–11
  4. By: Hoffmann, Timo; Renes, Sander
    Abstract: Before a group can take a decision, its members must agree on a mechanism to aggregate individual preferences. In this paper we present the results of an experiment on the influence of private payoff information and the role of the available alternatives on individuals’ mechanism choices in such group choice situations. While efficient mechanisms are desirable, we experimentally show that participation constraints can prevent their implementation. We find strong indications that individual preferences for choice rules are sensitive to individual expected payoffs. Our results highlight the importance of considering participation constraints when designing choice institutions.
    JEL: C91 C92 D70 D82
    Date: 2016
  5. By: Jong-Hee Hahn (Yonsei University); Jinwoo Kim (Seoul National University); Sang-Hyun Kim (University of East Anglia); Jihong Lee (Seoul National University)
    Abstract: This paper proposes a theory of price discrimination based on consumer loss aver- sion. A seller offers a menu of bundles before a consumer learns his willingness to pay, and the consumer experiences gain-loss utility with reference to his prior (rational) ex- pectations about contingent consumption. With binary consumer types, the seller fnds it optimal to abandon screening under an intermediate range of loss aversion if the low willingness-to-pay consumer is suffciently likely. We also identify suffcient conditions under which partial or full pooling dominates screening with a continuum of types. Our predictions are consistent with several observed practices of price discrimination.
    Keywords: Reference-dependent preferences, loss aversion, price discrimination, per- sonal equilibrium, preferred personal equilibrium.
    JEL: D03 D42 D82 D86 L11
    Date: 2016–11
  6. By: Bartke, Simon; Friedl, Andreas; Gelhaar, Felix; Reh, Laura
    Abstract: Social comparison nudges that employ descriptive norms were found to increase charitable giving. This paper finds that individuals who receive a descriptive norm donate significantly more when they have to guess the descriptive norm beforehand. We argue that guessing draws attention to the norm and therefore increases its effectiveness. Our results suggest that the effectiveness of nudges that use descriptive norms depends on how the a priori beliefs about the descriptive norm are updated.
    Keywords: social comparison nudge,attention,field experiment,charitable giving,social norms
    JEL: C93 D03 D64 H4
    Date: 2016
  7. By: Luigi Mittone; Fabrizio Panebianco; Alessandro Santoro
    Abstract: In this paper, we run a laboratory experiment where the information set is relatively rich, and, in particular, it includes audits on other taxpayers. At the same time, the implementation of the Bayesian updating process for the subjective probability to be audited is fairly simple. By doing so, we are able to elicit a range of consistent but heterogeneous probability beliefs and to distinguish between Bayesian and non-Bayesian subjects. We obtain two major results concerning Bayesian subjects. First, they exhibit strong and robust short-run BoCE. Second, they are seemingly not affected by audits on other taxpayers in their compliance decision. These results are robust to different definitions of Bayesianity and to different specifications. They confl ict with the evidence that Bayesian agents do perceive correctly the chance to be audited. In turn, this suggests that existing explanations of the BoCE are not entirely satisfactory and that alternative theories, possibly based on the Duality approach, are needed. KEYWORDS: Bomb-crater effect, Bayesian Updating, Behavioral Duality. JEL CODES: C91,D81,H26
    Date: 2016
  8. By: Konstantinos Georgalos; Enrica Carbone; Gerardo Infante
    Abstract: This paper focuses on comparing individual and group decision making, in a stochastic inter-temporal problem in two decision environments, namely risk and ambiguity. Using a consumption/saving laboratory experiment, we investigate behaviour in four treatments: (1) individual choice under risk; (2) group choice under risk; (3) individual choice under ambiguity and (4) group choice under ambiguity. Comparing decisions within and between decision environments, we find an anti-symmetric pattern. While individuals are choosing on average closer to the theoretical optimal predictions, compared to groups in the risk treatments, groups tend to deviate less under ambiguity. Within decision environments, individuals deviate more when they choose under ambiguity, while groups are better planners under ambiguity rather than under risk. We argue that the results might be driven by differences in the levels of ambiguity and risk attitudes between individuals and groups, extending the frequently observed pattern of groups behaving closer to risk and ambiguity neutrality, to its dynamic dimension.
    Keywords: Risk, Ambiguity, Inter-temporal Optimisation, Group Decision Making, Learning, Experiment
    JEL: C91 C92 D11 D91 E21
    Date: 2016
  9. By: McElroy, Todd (Florida Gulf Coast University); Dickinson, David L. (Appalachian State University)
    Abstract: In this study we test predictions from Unconscious Thought Theory (UTT) that unconscious thought will lead to better decision making in complex decision tasks relative to conscious thought. Different from prior work testing this prediction, we use a method of manipulating conscious and unconscious thinking that is free from distraction. Specifically, we use a 3-week protocol to experimentally induce adverse sleep and circadian states, both of which should reduce deliberative, conscious thinking and therefore increase the relative importance of more automatic unconscious processes. Our findings fail to support UTT predictions and instead coalesce with other replication attempts that cast doubt on the superiority of unconscious processing in complex decision making.
    Keywords: sleep restriction, circadian, complex decisions, decision making, unconscious reasoning, sleep, experiments, behavioral economics
    JEL: C91 D03
    Date: 2016–11
  10. By: Furtner, Nadja C. (University of Munich, Munich, Germany); Kocher, Martin G. (University of Munich, Munich, Germany); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Matzat, Dominik (University of Munich, Munich, Germany); Wollbrant, Conny (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Evidence of gender differences in cooperation in social dilemmas is inconclusive. This paper experimentally elicits unconditional contributions, a contribution vector (cooperative preferences), and beliefs about the level of others’ contributions in variants of the public goods game. We show that existing inconclusive results can be understood and completely explained when controlling for beliefs and underlying cooperative preferences. Robustness checks based on data from around 450 additional independent observations around the world confirm our main empirical results: Women are significantly more often classified as conditionally cooperative than men, while men are more likely to be free riders. Beliefs play an important role in shaping unconditional contributions, and they seem to be more malleable or sensitive to subtle cues for women than for men.
    Keywords: Public goods; conditional cooperation; gender; experiment
    JEL: C91 D64 H41
    Date: 2016–11
  11. By: Cettolin, Elena; Riedl, Arno (General Economics 1 (Micro)); Tran, Thu Giang (General Economics 1 (Micro))
    Abstract: The decision how to share resources with others often needs to be taken under uncertainty on its allocational consequences. Although risk preferences are likely important, existing research is silent about how social and risk preferences interact in such situations. In this paper we provide experimental evidence on this question. In a first experiment givers are not exposed to risk while beneficiaries’ final earnings may be larger or smaller than the allocation itself, depending on the realized state of the world. In a second experiment, risk affects the earnings of givers but not of beneficiaries. We find that individuals’ risk preferences are predictive for giving in both experiments. Increased risk exposure of beneficiaries tends to decrease giving whereas increased risk exposure of givers has no effect. Giving under risk is strongly correlated with giving in the absence of risk. We find limited support for existing models of ex-post and ex-ante fairness. Our results point to the importance of incorporating risk preferences in models of social preferences.
    JEL: C91 D03 D64 D81
    Date: 2016

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