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on Cognitive and Behavioural Economics |
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Issue of 2017‒01‒15
seven papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | James Alm (Department of Economics, Tulane University); Steven M. Sheffrin (Department of Economics, Tulane University) |
| Abstract: | This paper reviews the methodology of “behavioral economics†, and relates these methods to some specific and recent applications. |
| Keywords: | Behavioral economics, public economics. |
| JEL: | H3 D03 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1617&r=cbe |
| By: | Camerer, Colin; Dreber, Anna; Forsell, Eskil; Ho, Teck-Hua; Huber, Jurgen; Johannesson, Magnus; Kirchler, Michael; Almenberg, Johan; Altmejd, Adam; Chan, Taizan; Heikensten, Emma; Holzmeister, Felix; Imai, Taisuke; Isaksson, Siri; Nave, Gideon; Pfeiffer, Thomas; Razen, Michael; Wu, Hang |
| Abstract: | The reproducibility of scientific findings has been called into question. To contribute data about reproducibility in economics, we replicate 18 studies published in the American Economic Review and the Quarterly Journal of Economics in 2011-2014. All replications follow predefined analysis plans publicly posted prior to the replications, and have a statistical power of at least 90% to detect the original effect size at the 5% significance level. We find a significant effect in the same direction as the original study for 11 replications (61%); on average the replicated effect size is 66% of the original. The reproducibility rate varies between 67% and 78% for four additional reproducibility indicators, including a prediction market measure of peer beliefs. |
| Keywords: | replication, economics, experiment |
| JEL: | A12 B41 C9 |
| Date: | 2016–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75461&r=cbe |
| By: | Mark E. McGovern; Slawa Rokicki |
| Abstract: | Early life investments in children promote skills and capabilities, and subsequently influence a variety of health, social, and economic outcomes in later life. In this paper, we examine heterogeneity in children’s time use using diary data from two waves of a nationally representative longitudinal cohort study. Children from disadvantaged households spend significantly less time reading and engaging in sport than their counterparts, and more time in unstructured activities and using media. Though gaps are relatively small at age 9, they widen considerably over time. At age 13, girls in households with low maternal education spend on average 6 minutes per day reading (95% CI 6-14), and 12 minutes per day in sport (95% CI 23-31), while girls in households with high maternal education spend 14 minutes reading (95% CI 11-17) and 27 minutes in sport (95% CI 27-31). Similar differences were found for boys. Using a decomposition analysis, we find that resources, preferences, initial endowments, and differential costs all play a role in explaining time use concentration across households, indicating that disadvantaged families may be constrained in how they choose their preferred time use options. Given the important role of extra-curricular activities in promoting cognitive and non-cognitive skill development, the systematic differences in time use we document in this paper are likely to contribute to cumulative disadvantage and widening skill gaps over adolescence and into adulthood. |
| Keywords: | Time Use; Socioeconomic Disparities; Early Life Conditions; Skill Development |
| JEL: | I30 J10 J22 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:qub:charms:1702&r=cbe |
| By: | James Alm (Department of Economics, Tulane University); David M. Bruner (Department of Economics, Appalachian State University); Michael McKee (Department of Economics, Appalachian State University) |
| Abstract: | In many settings the true likelihood of capture when engaging in an illegal activity, such as tax evasion, is not well known to an individual. "Official" statements from the tax administration regarding enforcement effort provide some information. In addition, "informal", or "unofficial", communication among taxpayers can supplement these official announcements, but individuals do not know with certainty whether such unofficial information is honest (or accurate) versus dishonest (or inaccurate). We examine the truthfulness of an individual's revelation of unofficial information to other individuals, along with the factors that affect any revelation, focusing on the intrinsic motivations for revelations. Our experimental design allows us to examine the type and the honesty of messages that an individual chooses to send to other individuals regarding their own audit outcome and their own compliance behavior. Our results indicate that most individuals send accurate messages about their own audit outcomes and their own compliance behaviors. Nevertheless, many individuals are also systematically dishonest about being audited; that is, we observe a significant tendency for individuals to claim that they were audited when they were not. We also observe a strong interaction between individuals' audit outcomes and their compliance behaviors, so that individuals who engaged in tax evasion and who were audited were more truthful in their communications than those whose tax evasion went undetected. |
| Keywords: | Tax compliance, Tax audits, Information, Honesty, Experimental economics. |
| JEL: | H2 H26 C91 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1620&r=cbe |
| By: | James Alm (Department of Economics, Tulane University); Kim M. Bloomquist (Taxpayer Advocate Service, U.S. Internal Revenue Service); Michael McKee (Department of Economics, Appalachian State University) |
| Abstract: | In this paper, we suggest that individuals' tax compliance behaviours are affected by the behaviour of their "neighbours", or those about whom they may have information, whom they may know, or with whom they may interact on a regular basis. Individuals are more likely to file and to report their taxes when they believe that other individuals are also filing and reporting their taxes; conversely, when individuals believe that others are cheating on their taxes, they may well become cheaters themselves. We use experimental methods to test the role of such information about peer effects on compliance behaviour. In one treatment setting, we inform individuals about the frequency that their neighbours submit a tax return. In a second treatment setting, we inform them about the number of their neighbours who are audited, together with the penalties that they pay. In both cases, we examine the impact of information on filing behaviour and also on subsequent reporting behaviour. We find that providing information on whether one's neighbours are filing returns and/or reporting income has a statistically significant and economically large impact on individual filing and reporting decisions. However, this "neighbour" information does not always improve compliance, depending on the exact content of the information. |
| Keywords: | Tax evasion, Tax compliance, Behavioural economics, Experimental economics. |
| JEL: | H26 C91 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1619&r=cbe |
| By: | Berger, Ulrich |
| Abstract: | Interpersonal trust is a one-sided social dilemma. Building on the binary trust game, we ask how trust and trustworthiness can evolve in a population where partners are matched randomly and agents sometimes act as trustors and sometimes as trustees. Trustors have the option to costly check a trustee's last action and to condition their behavior on the signal they receive. We show that the resulting population game admits two components of Nash equilibria. Nevertheless, the long-run outcome of an evolutionary social learning process modeled by the best response dynamics is unique. Even if unconditional distrust initially abounds, the trustors' checking option leads trustees to build a reputation for trustworthiness by honoring trust. This invites free-riders among the trustors who save the costs of checking and trust blindly, until it does no longer pay for trustees to behave in a trustworthy manner. This results in cyclical convergence to a mixed equilibrium with behavioral heterogeneity where suspicious checking and blind trusting coexist while unconditional distrust vanishes. (author's abstract) |
| Keywords: | trust game; evolutionary game theory; reputation; best response dynamics |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:4806&r=cbe |
| By: | Aurélie Bonein; Cécile Bazart |
| Abstract: | Starting from the observation of taxpayers’ heterogeneity in terms of honesty andof the existence of a perverse social dynamic leading the most honest to evade, wepropose a simple mechanism to restore honesty. In a laboratory experiment, we testthe willingness of subjects to voluntarily contribute to a fund dedicated to financethe fight against tax evasion. This voluntary contribution mechanism, without redis-tribution, is analyzed thanks to several treatments that differ depending on the typeand the level of the required contribution. We show: (i) that a substantial numberof subjects contribute and that the frequency of contribution decreases with the in-crease in the level of contribution; (ii) that the most honest taxpayers are those whocontribute and (iii) that risk aversion deters subjects to contribute, while inequalityaversion encourages them. Finally, in line with the literature on tax evasion, we con-firm that the increase in the audit probability, which is observed only in groups wherethe collective contribution is sufficient, reduces evasion in these groups.. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:17-02&r=cbe |