nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒02‒19
eight papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Using Response Times to Measure Strategic Complexity and the Value of Thinking in Games By Gill, David; Prowse, Victoria L.
  2. Framing effects in the Prisoner’s Dilemma but not in the Dictator Game By Sebastian Goerg; David Rand; Gari Walkowitz
  3. Combining Behavioral Economics and Field Experiments to Reimagine Early Childhood Education By John List; Anya Samek; Dana Suskind
  4. Evidence of Conditional and Unconditional Cooperation in a Public Goods Game: Experimental Evidence from Mali By Lopera Baena, Maria Adelaida
  5. Changing preferences through experimental games: Evidence from sanitation and hygiene in Tamil Nadu: By Stopnitzky, Yaniv
  6. Risk Aversion and Son Preference: Experimental Evidence from Chinese Twin Parents By Chew, Soo Hong; Yi, Junjian; Zhang, Junsen; Zhong, Songfa
  7. Seeking Risk or Answering Smart? Experimental Evidence on Framing Effects in Elementary Schools By Wagner, Valentin
  8. Nudge and Tax in an Environmental Public Goods Experiment: Does Environmental Sensitivity Matter? By Kene Boun My; Benjamin Ouvrard

  1. By: Gill, David (Purdue University); Prowse, Victoria L. (Purdue University)
    Abstract: Response times are a simple low-cost indicator of the process of reasoning in strategic games (Rubinstein, 2007; Rubinstein, 2016). We leverage the dynamic nature of response-time data from repeated strategic interactions to measure the strategic complexity of a situation by how long people think on average when they face that situation (where we define situations according to the characteristics of play in the previous round). We find that strategic complexity varies significantly across situations, and we find considerable heterogeneity in how responsive subjects' thinking times are to complexity. We also study how variation in response times at the individual level across rounds affects strategic behavior and success. We find that 'overthinking' is detrimental to performance: when a subject thinks for longer than she would normally do in a particular situation, she wins less frequently and earns less. The behavioral mechanism that drives the reduction in performance is a tendency to move away from Nash equilibrium behavior.
    Keywords: response time, decision time, thinking time, strategic complexity, game theory, strategic games, repeated games, beauty contest, cognitive ability, personality
    JEL: C72 C91
    Date: 2017–01
  2. By: Sebastian Goerg (Florida State University); David Rand (Yale University); Gari Walkowitz (University of Cologne)
    Abstract: We systematically investigate prisoner’s dilemma games and dictator games with valence framing. We find that give versus take frames influence subjects’ behavior and beliefs in the prisoner’s dilemma game but not in the dictator game.
    Keywords: Prisoner’s Dilemma, Dictator Game, Framing, Give, Take, Cooperation, Generosity
    JEL: A13 C72 C91 F51 Z13
    Date: 2017–02
  3. By: John List; Anya Samek; Dana Suskind
    Abstract: Behavioral economics and field experiments within the social sciences have advanced well beyond academic curiosum. Governments around the globe as well as the most powerful firms in modern economies employ staffs of behavioralists and experimentalists to advance and test best practices. In this study, we combine behavioral economics with field experiments to reimagine a new model of early childhood education. Our approach has three distinct features. First, by focusing public policy dollars on prevention rather than remediation, we call for much earlier educational programs than currently conceived. Second, our approach has parents at the center of the education production function rather than at its periphery. Third, we advocate attacking the macro education problem using a public health methodology, rather than focusing on piecemeal advances.
    Date: 2017
  4. By: Lopera Baena, Maria Adelaida
    Abstract: This paper measures the relative importance of "conditional cooperation" and "unconditional cooperation" in a large public goods experiment conducted in Mali. We use expectations about total public goods provision to estimate a structural choice model with heterogeneous preferences. While unconditional cooperation can be captured by common preferences shared by all participants, conditional cooperation is much more heterogeneous and depends on unobserved individual factors. This structural model, in combination with two experimental treatments, suggests that leadership and group communication incentivize public goods provision through different channels. First, We find that participation of local leaders effectively changes individual choices through unconditional cooperation. A simulation exercise predicts that even in the most pessimistic scenario in which all participants expect zero public good provision, 60% would still choose to cooperate. Second, allowing participants to communicate fosters conditional cooperation. The simulations suggest that expectations are responsible for around 24% of the observed public good provision and that group communication does not necessarily ameliorate public good provision. In fact, communication may even worsen the outcome when expectations are low.
    JEL: C93 D03 H41
    Date: 2016
  5. By: Stopnitzky, Yaniv
    Abstract: Much policy interest in sanitation and hygiene promotion focuses on changing behavior and increasing demand for these goods. Yet the effectiveness of large-scale interventions has been mixed, in large part because of the difficulty of changing attitudes on deeply rooted behaviors. This study tests whether an experiential learning exercise structured around an experimental game can be used to shift preferences around sanitation and hygiene. A minimum coordination game is adapted to the sanitation and hygiene setting by linking game choices to real-world investment decisions and payoffs in terms of health and status. Individuals from 20 villages in rural Tamil Nadu were randomly assigned to one of three groups: one that played a game in which communication between rounds was allowed, another that played a game in which communication was prohibited, and a control group that only completed a survey. Based on a comparison of survey responses across treatment arms, the game improved stated preferences in relation to sanitation and hygiene. This effect was larger when communication was allowed, and men responded on average more strongly than women across both versions of the game. These results suggest that experimental games can be a valuable tool not only for the study of decision making but for improving participants’ knowledge and pro-sanitation preferences.
    Keywords: hygiene, sanitation, health, behaviour, behavior, governance,
    Date: 2016
  6. By: Chew, Soo Hong (National University of Singapore); Yi, Junjian (National University of Singapore); Zhang, Junsen (Chinese University of Hong Kong); Zhong, Songfa (National University of Singapore)
    Abstract: We study the role of risk aversion underlying son preference in patriarchal societies, where sons serve as better insurance for old-age support than daughters. The implications of an insurance motive on son preference are two-fold. First, prior to the birth of their children, more risk-averse parents have a stronger preference for sons than for daughters. Second, after the birth of their children, parents with sons are more risk seeking, compared to parents with daughters. We adopt a within-twin-pair fixed-effects estimator with a weak identification assumption, which enables us to jointly identify these two effects. We further conduct an incentivized choice experiment to assess parental risk attitude in a sample of Chinese twins with children, and follow up with a second twin sample to examine the replicability of the findings. In both samples, we find that parents with greater risk aversion before the birth of their children are more likely to have sons through sex selection than parents with less risk aversion. Additionally, having sons significantly decreases parental risk aversion. These results contribute to the literature on the sources of son preference and help shed light on the nature of gender inequality.
    Keywords: risk aversion, son preference, twins, experimental economics
    JEL: C93 D01 D80 J13
    Date: 2017–01
  7. By: Wagner, Valentin
    Abstract: Losses are painful but how painful are negative outcomes? This paper presents results of a field experiment among 1377 elementary pupils on the effectiveness of loss framing and avoiding negative outcomes on pupils test performance. I compare answers of pupils in a multiple-choice test in math who are endowed with 0 points and earning points is framed as a gain (Control Group) to pupils who are endowed with the maximum number of points but earning points is framed as a loss (Loss Treatment). In a second treatment arm (Negative Treatment) earning points is again framed as a gain but pupils are endowed with a negative amount of points. However, pupils in this treatment could achieve a positive outcome by earning at least half of the points. I find that, on average, the number of correctly solved questions increases significantly in both treatments (Loss and Negative). The multiple-choice testing format allows to identify the underlying channels of improvements. While pupils in the Loss Treatment significantly seem to seek more risk---answer more multiple-choice questions---pupils in the Negative Treatment significantly answer more accurately---increase the share of correctly answered questions. Nevertheless, the Negative Treatment is preferable to the Loss Treatment as both treatments indeed significantly increase performance of high-ability pupils but low-ability pupils significantly perform worse under a loss frame.
    JEL: C93 I20 D80
    Date: 2016
  8. By: Kene Boun My; Benjamin Ouvrard
    Abstract: We provide an experimental test of the theoretical predictions obtained in Ouvrard and Spaeter (2016). A public goods experiment is proposed in which the subjects can contribute to reduce the level of pollution, which is stochastic. A nudge (announcement of the socially optimal contribution) and a tax are implemented to improve the level of contributions. The environmental sensitivity and optimism of the subjects are also elicited. Our first result shows that the implementation of the nudge does not perform as well as the implementation of the tax. The reaction to the nudge depends directly on individuals’ environmental sensitivity, contrary to the reaction to the tax. Secondly, the nudge performs well with highly sensitive subjects only during the first half of its implementation. Lastly, the efficiency analysis shows that the implementation of the nudge significantly decreases the groups’ welfare for the least sensitive subjects, in comparison to the baseline. In sum, these results tend to corroborate the predictions obtained in Ouvrard and Spaeter (2016).
    Keywords: incentives, nudge, environmental sensitivity, optimism, tax.
    JEL: C91 H41 Q58
    Date: 2017

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