nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒01‒01
six papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Self-confidence and unraveling in matching markets By Dargnies, Marie-Pierre; Hakimov, Rustamdjan; Kübler, Dorothea
  2. Cooperation under risk and ambiguity By Björk, Lisa; Kocher, Martin; Martinsson, Peter; Nam Khanh, Pham
  3. Beliefs about Gender By Pedro Bordalo; Katie Coffman; Nicola Gennaioli; Andrei Shleifer
  4. Early Childhood Environment, Breastfeeding and the Formation of Preferences By Armin Falk; Fabian Kosse
  5. "Many a slip between the cup and the lip": The effect of default-based nudges on prosocial behavior and attitudes By Gaudeul, Alexia; Kaczmarek, Magdalena Claudia
  6. Do you see me the way I see myself? Narcissists are less prone to illusion of transparency than other people By Laetitia Renier; Claudia Toma; Olivier Corneille

  1. By: Dargnies, Marie-Pierre; Hakimov, Rustamdjan; Kübler, Dorothea
    Abstract: We document experimentally how biased self-assessments affect the outcome of matching markets. In the experiments, we exogenously manipulate the self-confidence of participants regarding their relative performance by employing hard and easy real-effort tasks. We give participants the option to accept early offers when information about their performance has not been revealed, or to wait for the assortative matching based on their actual relative performance. Early offers are accepted more often when the task is hard than when it is easy. We show that the treatment effect works through a shift in beliefs, i.e., underconfident agents are more likely to accept early offers than overconfident agents. The experiment identifies a behavioral determinant of unraveling, namely biased self-assessments, which can lead to penalties for underconfident individuals as well as efficiency losses.
    Keywords: market unraveling,experiment,self-confidence,matching markets
    JEL: C92 D47 D83
    Date: 2016
  2. By: Björk, Lisa (Department of Economics, School of Business, Economics and Law, Göteborg University); Kocher, Martin (Department of Economics, LMU Munich); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Nam Khanh, Pham (School of Economics, Ho Chi Minh City University of Economics)
    Abstract: The return from investments in public goods is almost always uncertain, in contrast to the most common setup in the existing empirical literature. We study the impact of natural uncertainty on cooperation in a social dilemma by conducting a public goods experiment in the laboratory in which the marginal return to contributions is either deterministic, risky (known probabilities) or ambiguous (unknown probabilities). Our design allows us to make inferences on dierences in cooperative attitudes, beliefs, and one-shot as well as repeated contributions to the public good under the three regimes. Interestingly, we do not find that natural uncertainty has a significant impact on the inclination to cooperate, neither on the beliefs of others nor on actual contribution decisions. Our results support the generalizability of previous experimental results based on deterministic settings. From a behavioural point of view, it appears that strategic uncertainty overshadows natural uncertainty in social dilemmas.
    Keywords: Public good; conditional cooperation; experiment; uncertainty; risk; ambiguity
    JEL: C91 D64 D81 H41
    Date: 2016–12
  3. By: Pedro Bordalo; Katie Coffman; Nicola Gennaioli; Andrei Shleifer
    Abstract: We conduct a laboratory experiment on the determinants of beliefs about own and others? ability across different domains. A preliminary look at the data points to two distinct forces: miscalibration in estimating performance depending on the difficulty of tasks and gender stereotypes. We develop a theoretical model that separates these forces and apply it to analyze a large laboratory dataset in which participants estimate their own and a partner?s performance on questions across six subjects: arts and literature, emotion recognition, business, verbal reasoning, mathematics, and sports. We find that participants greatly overestimate not only their own ability but also that of others, suggesting that miscalibration is a substantial, first order factor in stated beliefs. Women are better calibrated than men, providing more accurate estimates of ability both for themselves and for others. Gender stereotypes also have strong predictive power for beliefs, particularly for men?s beliefs about themselves and others? beliefs about the ability of men. Our findings help interpret evidence on gender gaps in self-confidence.
    Date: 2016–12
  4. By: Armin Falk; Fabian Kosse
    Abstract: This study provides insights on the role of early childhood family environment within the process of preference formation. We start by presenting evidence showing that breastfeeding duration is a valid measure of the quality of early childhood environment. In the main analysis, we then investigate how early childhood environment affects the formation of fundamental economic preferences such as time, risk, and social preferences. In a sample of preschool children we find that longer breastfeeding duration is associated with higher levels of patience and altruism as well as a lower willingness to take risk. Repeating the analysis on a sample of young adults indicates that the observed pattern is replicable and persists into adulthood. Importantly, in both data sets our findings are robust when controlling for cognitive ability and parental socio-economic status. We can further rule out that the results are purely driven by nutritional effects of breastfeeding. Altogether, our findings strongly suggest that early childhood environment as measured by breastfeeding duration systematically and persistently affects preference formation.
    Keywords: Time preferences, risk preferences, altruism, experiments with children, origins of preferences, childhood environment, breastfeeding
    JEL: C91 D64 D90 D81 J13
    Date: 2016
  5. By: Gaudeul, Alexia; Kaczmarek, Magdalena Claudia
    Abstract: Recent evidence suggests that default based nudges i.e. alterations in the decisional context, can have large effects on decision making and can be used as policy interventions to improve individual and public welfare. This paper presents the results of a controlled experiment (N = 988), designed to evaluate not only the effectiveness of a default manipulation on decision making, but also to explore how yielding or opposing a nudge intervention later affects attitudes (towards the nudge and the nudger) and behavior in a charity giving context. The results show that while the default nudge was effective at the time of application, it was not enough to change attitudes towards the nudged behavior as would be needed for long-term success. Indeed, we rather find that those who adopted an action that went against the nudge were more motivated to follow on through with this action later on than those who went with the nudge. We furthermore show that giving people more leeway in how to respond to a nudge improves acceptance of the nudge. We finally discuss the practical implications of our findings in terms of the applicability of default-based nudges as a tool for policy interventions.
    Keywords: nudging,defaults,decision making,prosocial behavior,charity giving,behavioral economics
    JEL: C9 D04 D12 D64 H41
    Date: 2016
  6. By: Laetitia Renier; Claudia Toma; Olivier Corneille
    Abstract: People tend to believe that their internal states are transparent to others (e.g. illusion of transparency), and even more when they are self-centred. Would it be the case for narcissistic individuals who are highly self-centred? Three studies investigated whether narcissists feel more transparent because they are egocentric, or whether they feel less transparent because they are socially skilled. Using a vignette method, Study 1 showed that the more participants were narcissists, the less they felt transparent with regard to their emotions, values and behaviour. Study 2 further showed that this association was stronger when narcissistic characteristics were valorised. In addition, the negative link between narcissism and felt transparency was mediated by self-monitoring. Using a face-to-face interaction, Study 3 provided evidence that participants high on narcissism were less prone to illusion of transparency. Overall our studies suggest that narcissists’ meta-perception is more accurate, less egocentric because they are socially skilled.
    Keywords: felt transparency; illusion of transparency; narcissism; metaperception; egocentrism
    Date: 2016–12–23

This nep-cbe issue is ©2017 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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