nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒05‒07
eight papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. The Cultural Transmission of Trust Norms: Evidence from a Lab in the Field on a Natural Experiment By Jared Rubin; Elira Karaja
  2. Do The Effects of Social Nudges Persist? Theory and Evidence from 38 Natural Field Experiments By Alec Brandon; Paul J. Ferraro; John A. List; Robert D. Metcalfe; Michael K. Price; Florian Rundhammer
  3. Professional identity and the gender gap in risk-taking: Evidence from a field experiment with scientists By Drupp, Moritz A.; Khadjavi, Menusch; Riekhof, Marie-Catherine; Voss, Rüdiger
  4. (A)symmetric Information Bubbles: Experimental Evidence By Asako, Yasushi; Funaki, Yukihiko; Ueda, Kozo; Uto, Nobuyuki
  5. Financial literacy and bank runs: an experimental analysis By Eloisa Campioni; Vittorio Larocca; Loredana Mirra; Luca Panaccione
  6. CONFIDENCE AND OVERCONFIDENCE IN BANKING By Damiano Bruno Silipo; Giovanni Verga; Sviatlana Hlebik
  7. Nudging the electorate: what works and why? By Felix Koelle; Tom Lane; Daniele Nosenzo; Chris Starmer
  8. A little good is good enough: Ethical consumption, cheap excuses, and moral self-licensing By Engel, Jannis; Szech, Nora

  1. By: Jared Rubin (Chapman University); Elira Karaja (World Bank and Harriman Institute at Columbia University)
    Abstract: We conduct trust games in three villages in a northeastern Romanian commune. From 1775-1919, these villages were arbitrarily assigned to opposite sides of the Habsburg and Ottoman/Russian border despite being located seven kilometers apart. Russian and Ottoman Öscal institutions were more rapacious than Habsburg institutions, which may have eroded trust of outsiders (relative to co-villagers). Our design permits us to rigorously test this conjecture, and more generally, whether historically institutionalized cultural norms are transmitted intergenerationally. We Önd that participants on the Ottoman/Russian side are indeed less likely to trust outsiders but more likely to trust co-villagers.
    Keywords: trust, trust game, culture, cultural transmission, natural experiment, Öeld experiment, laboratory experiment, norms, Romania, Austria, Ottoman Empire, Habsburg Empire
    JEL: C91 C93 N33 O17 Z1
    Date: 2017
  2. By: Alec Brandon; Paul J. Ferraro; John A. List; Robert D. Metcalfe; Michael K. Price; Florian Rundhammer
    Abstract: This study examines the mechanisms underlying long-run reductions in energy consumption caused by a widely studied social nudge. Our investigation considers two channels: physical capital in the home and habit formation in the household. Using data from 38 natural field experiments, we isolate the role of physical capital by comparing treatment and control homes after the original household moves, which ends treatment. We find 35 to 55 percent of the reductions persist once treatment ends and show this is consonant with the physical capital channel. Methodologically, our findings have important implications for the design and assessment of behavioral interventions.
    Keywords: energy efficiency, field experiments, nudges, persistence
    JEL: C93 D01 D03 Q30
    Date: 2017–04
  3. By: Drupp, Moritz A.; Khadjavi, Menusch; Riekhof, Marie-Catherine; Voss, Rüdiger
    Abstract: The gender gap in risk-taking is often used to explain differences in labor market outcomes. Some studies, however, suggest that this gender gap does not extend to professional contexts. This paper examines potential drivers of the gender gap in risk-taking, comparing the professional context of academia to a private setting. We draw on identity economics, which posits that individuals form multiple identities that moderate behavior across contexts. In an online field experiment with 474 scientists we vary the salience of the professional or private identity. We find that the gender gap in risk-taking is mediated when the professional identity is salient. We identify the switching of identities by females as an explanation. Our results suggest that if the gender gap in risk-taking is driven by selection, the selection is not (only) along risk-aversion, but (also) along the ability to switch between identities and to adapt to prevailing norms. This provides new insights for the discussion on gender, risk-taking and labor market policies, and suggests an important role for mentoring programs.
    Keywords: gender,risk-taking,identity,priming,labor market,field experiment
    JEL: J16 D81 C93
    Date: 2017
  4. By: Asako, Yasushi (Waseda University); Funaki, Yukihiko (Waseda University); Ueda, Kozo (Waseda University); Uto, Nobuyuki (Waseda University)
    Abstract: Asymmetric information has been necessary to explain a bubble in past theoretical models. This study experimentally analyzes traders’ choices, with and without asymmetric information, based on the riding-bubble model. We show that traders have an incentive to hold a bubble asset for longer, thereby expanding the bubble in a market with symmetric, rather than asymmetric information. However, when traders are more experienced, the size of the bubble decreases, in which case bubbles do not arise, with symmetric information. In contrast, the size of the bubble is stable in a market with asymmetric information.
    JEL: C72 D82 D84 E58 G12 G18
    Date: 2017–04–01
  5. By: Eloisa Campioni (DEF and CEIS, Università di Roma "Tor Vergata",); Vittorio Larocca (Luiss Guido Carli); Loredana Mirra (DEF, Università di Roma "Tor Vergata",); Luca Panaccione (DEF and CEIS, Università di Roma "Tor Vergata",)
    Abstract: In this experimental study on the determinants of bank run, participants anonymously interact via an experimental bank deciding whether to withdraw or not their deposit. As in Diamond and Dybvig (1983), runs result from a fundamental coordination problem. We elicit subjects’ financial literacy and study whether revealing this information helps in solving the equilibrium coordination in such games with multiple equilibria. As a control we also use information about elicited general knowledge. Within the same framework, we let the bank size vary to investigate how it affects coordination on bank run. We find that, when no information is revealed, the likelihood of runs increases with bank size. Whereas, when information on financial literacy is revealed, the likelihood of runs increases in small and decreases in large banks. Our analyses also show that subjects react to information on financial literacy and general knowledge in a different way. Getting to know that a group has higher financial literacy reduces the probability of run. While, when information about general knowledge is revealed, risk aversion at group level becomes relevant and positively affects the probability of bank run. In all specifications, bank run occurrence is positively affected by short-run withdrawal history and by subjects’ experience.
    Keywords: Bank runs,Experimental studies,Financial literacy,Coordination games
    JEL: C70 C92 D80 G21
    Date: 2017–04–20
  6. By: Damiano Bruno Silipo; Giovanni Verga; Sviatlana Hlebik (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: The paper investigates the causes of confidence and overconfidence and their effects on banking behavior and performance for a large sample of American banks in the period 2000-2013. We construct a new indicator of confidence based on banks’ loss provisions and show that before 2007 risk-taking, lending and leverage increased relatively more for banks with an intermediate degree of confidence (mid-confidents) than for the overconfident. The former also suffered the greatest losses in the financial crash of 2007-2008. Hence, unlike the previous literature on overconfidence, we find that the financial crisis was determined mainly by the increased confidence of the mid-confident bank CEOs and not the behavioral biases of overconfident CEOs. The latter, in fact, have more persistent beliefs and react less strongly to news during cyclical upswings. Finally, we show that overconfident behavior is unlikely to maximize a bank’s value.
    Keywords: Confidence and Overconfidence Index, Banking behavior, Confidence and Bank Value
    JEL: G01 G02 G21
    Date: 2017–04
  7. By: Felix Koelle (Department of Economics, University of Cologne); Tom Lane (Department of Economics, University of Nottingham); Daniele Nosenzo (School of Economics, University of Nottingham); Chris Starmer (School of Economics, University of Nottingham)
    Abstract: We report two studies investigating whether, and if so how, different interventions affect voter registration rates. In a natural field experiment conducted before the 2015 UK General Election, we varied messages on a postcard sent by Oxford City Council to 7,679 unregistered student voters encouraging them to register to vote. Relative to a baseline, emphasising negative monetary incentives (the possibility of being fined) significantly increased registration rates, while positive monetary incentives (chances of winning a lottery) and purely non-monetary nudges had no overall effects. In the second study, we show that these differences can be partly explained by social norms.
    Keywords: Voter Registration; Voting; Field Experiment; Nudging; Social Norms; Fines; Rewards
    Date: 2017–05
  8. By: Engel, Jannis; Szech, Nora
    Abstract: This paper explores the role of cheap excuses in product choice. If a product improves upon one ethically relevant dimension, agents may care less about other independent ethical facets of the product. Opting for a product that fulfills one ethical aspect may thus suffice for keeping a high moral self-image in agents, and render it easier to ignore other ethically relevant aspects they would otherwise care about. The use of such cheap excuses could thus lead to a 'static moral self-licensing' effect. This would extend the logic of the well-known moral self-licensing over time. Our experimental study provides empirical evidence that the static counterpart of moral self-licensing exists. Furthermore, effects spill over to unrelated, ethically relevant contexts later in time. Thus, static moral self-licensing and moral self-licensing over time can amplify each other. Outsiders, though monetarily incentivized for correct estimates, are completely oblivious to the effects of moral selflicensing, both, static and over time.
    Keywords: moral self-licensing,moral spillovers,cheap excuses,outsider beliefs,moral personality
    JEL: D03 D84
    Date: 2017

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