nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒06‒11
nine papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Behavioral Uncertainty and the Dynamics of Traders' Confidence in their Price Forecasts By Nobuyuki Hanaki; Eizo Akiyama; Ryuichiro Ishikawa
  2. To claim or not to claim: Anonymity, reciprocal externalities and honesty By Christian Schitter; Jürgen Fleiß; Stefan Palan
  3. Spillover Effects of Institutions on Cooperative Behavior, Preferences and Beliefs By Engl, Florian; Riedl, Arno; Weber, Roberto A.
  4. High-income consumers may be less hyperbolic when discounting the future By Da Silva, Sergio; De Faveri, Dinorá; Correa, Ana; Matsushita, Raul
  5. Automatic evaluation of faces predict mayor election outcomes in Brazil By Da Silva, Sergio; De Novais, Joao Felipe
  6. Social preferences, financial literacy and intertemporal choice By Da Silva, Sergio; De Faveri, Dinorá; Correa, Ana; Matsushita, Raul
  7. Competition and Subsequent Risk-Taking Behaviour: Heterogeneity across Gender and Outcomes By Filippin, Antonio; Gioia, Francesca
  8. Nudging Study Habits: A Field Experiment on Peer Tutoring in Higher Education By Wilson, Nicholas; Pugatch, Todd
  9. Immaterial and Monetary Gifts in Economic Transactions - Evidence from the Field By Michael Kirchler; Stefan Palan

  1. By: Nobuyuki Hanaki (Université Côte d'Azur; GREDEG-CNRS; IUF); Eizo Akiyama (University of Tsukuba, Japan); Ryuichiro Ishikawa (University of Tsukuba, Japan)
    Abstract: By how much does the presence of behavioral uncertainty in an experimental asset market reduce subjects' confidence in their price forecasts? An incentivized interval forecast elicitation method is employed to answer this question. Each market consists of six traders, and the value of dividends is known. Two treatments are considered: six human traders (6H), and one human interacting with five computer traders whose behavior is known (1H5C). We find that while the deviation of the initial price forecasts from the fundamental value is significantly smaller in the 1H5C treatment than in the 6H treatment, the average confidence regarding the forecasts is not. We further analyze the relationships between subjects' confidence in their forecasts and their trading behavior, as well as their trading performance, in the 6H treatment. While subjects' high confidence in their short-term forecasts shows a negative correlation with their trading performance, high confidence in their long-term forecasts shows a positive correlation with trading performance.
    Keywords: Price forecasts, interval elicitation, experimental asset markets, behavioral uncertainty
    JEL: C90 D84
    Date: 2017–06
  2. By: Christian Schitter (Department of Banking and Finance, University of Graz); Jürgen Fleiß (Department of Corporate Leadership and Entrepreneurship, University of Graz); Stefan Palan (Department of Banking and Finance, University of Graz)
    Abstract: This paper investigates the determinants of (dis)honesty of reporters filing unverified claims for money. First, does honest reporting increase when each reporter's unverified claim is made public? We present experimental evidence to this effect. The driver behind this is activation of the preference for appearing honest. Second, does honest reporting increase when it is public knowledge that reporters' claims affect others and reporters are reciprocally affected by others' claims? We find no such effect. Fear of losing out against others who untruthfully claim too much may outweigh honesty and pro-social considerations.
    Date: 2017–05–24
  3. By: Engl, Florian (University of Cologne); Riedl, Arno (Maastricht University); Weber, Roberto A. (University of Zurich)
    Abstract: Institutions are an important means for fostering prosocial behaviors, but in many contexts their scope is limited and they govern only a subset of all socially desirable acts. We use a laboratory experiment to study how the presence and nature of an institution that enforces prosocial behavior in one domain affects behavior in another domain and whether it also alters prosocial preferences and beliefs about others' behavior. Groups play two identical public good games. We vary whether, for only one game, there is an institution enforcing cooperation and vary also whether the institution is imposed exogenously or arises endogenously through voting. Our results show that the presence of an institution in one game generally enhances cooperation in the other game thus documenting a positive spillover effect. These spillover effects are economically substantial amounting up to 30 to 40 percent of the direct effect of institutions. When the institution is determined endogenously spillover effects get stronger over time, whereas they do not show a trend when it is imposed exogenously. Additional treatments indicate that the main driver of this result is not the endogeneity but the temporal trend of the implemented institution. We also find that institutions of either type enhance prosocial preferences and beliefs about others' prosocial behavior, even toward strangers, suggesting that both factors are drivers of the observed spillover effects.
    Keywords: public goods, institutions, spillover effect, social preferences, beliefs
    JEL: C92 D02 D72 H41
    Date: 2017–05
  4. By: Da Silva, Sergio; De Faveri, Dinorá; Correa, Ana; Matsushita, Raul
    Abstract: We investigate to what extent high-income consumers are less hyperbolic than low-income consumers using a sample of 216 bank customers and 796 undergraduates. We assess whether participants who scored lower on a test of cognitive ability were also those who tended to discount the future hyperbolically. Our problem is then to find whether lower cognitive ability translates into hyperbolic discounting. The students had higher implicit discount rates, i.e. they were more hyperbolic, for both low stakes and high stakes when long delays were involved, a result in line with the literature. The undergraduates tended to be hyperbolic regardless of stake size, whereas the bank customers tended to be hyperbolic only when high stakes were involved. This makes sense, as high-income consumers should be less sensitive to low stakes. The bank clients showed superior cognitive ability and this may explain why their System 2 could be more capable of overriding cognitive biases, such as the present bias.
    Keywords: hyperbolic discounting, cognitive ability, high-income consumers, behavioral economics
    JEL: D03
    Date: 2017
  5. By: Da Silva, Sergio; De Novais, Joao Felipe
    Abstract: Elections can be decided on the basis of automatic evaluations of a candidate’s face that take less than one second. These inferences are specific to competence and they could predict better than chance 68.8 percent of the U.S. Senate race results in 2004. Such a finding suggests fast, unreflective trait inferences can contribute to voting choices. We replicated this finding for the 2012 and 2016 municipal elections that took place in the southern Brazil state of Santa Catarina. Mayors could have been elected partially by automatic perceptions of competence.
    Keywords: Voting behavior, Automatic face evaluation, Election outcomes, Nonverbal behavior, Field experiment
    JEL: D03
    Date: 2017
  6. By: Da Silva, Sergio; De Faveri, Dinorá; Correa, Ana; Matsushita, Raul
    Abstract: We evaluate the relationship between social preferences, financial literacy and intertemporal choice in questionnaires distributed to university students. Most respondents perform well on a financial literacy test, and the majority show prosocial value orientation. Older students tend to be more prosocial, but we cannot confirm in our sample that females are more prosocial than males. We cannot confirm, either, that the prosocial are more financially literate than individualists and the competitive. Most respondents do not show hyperbolic discounting, and its incidence abates as both stakes and payoff delays increase. Prosocial participants also reveal to be more patient across the questionnaires.
    Keywords: Social preferences, Social Value Orientation, Financial literacy, Intertemporal choice, Hyperbolic discounting, Impatience
    JEL: D03
    Date: 2017
  7. By: Filippin, Antonio (University of Milan); Gioia, Francesca (University of Edinburgh)
    Abstract: This paper studies if competition affects subsequent risk-taking behaviour by means of a laboratory experiment that manipulates the degree of competitiveness of the environment under equivalent monetary incentives. We find that competition increases risk aversion, especially for males, but not in a significant manner. When conditioning on the outcome, we find that males become significantly more risk averse after losing the tournament than after randomly earning the same low payoff. In contrast, males do not become more risk-seeking after winning the tournament, while females' average risk-taking behaviour is unaffected by tournament participation and outcomes. We interpret our findings in terms of males' reaction to negative outcomes driven by intrinsic motives, such as emotions or a shift in the locus of control from internal to external.
    Keywords: competition, risk attitudes, gender
    JEL: C81 C91 D81
    Date: 2017–05
  8. By: Wilson, Nicholas (Reed College); Pugatch, Todd (Oregon State University)
    Abstract: More than two of every five students who enrolled in college in 2007 failed to graduate by 2013. Peer tutoring services offer one approach toward improving learning outcomes in higher education. We conducted a randomized controlled experiment designed to increase take-up of university tutoring services. Brief, one-time messages increased tutoring take-up by 7 percentage points, or 23% of the control group mean. Attendance at multiple tutoring sessions increased by nearly the same amount, suggesting substantial changes in study habits in response to a simple and inexpensive intervention. We find little evidence of advertising-induced tutoring on learning outcomes.
    Keywords: peer tutoring, human capital investment, behavioral response to advertising, nudges, higher education
    JEL: D83 I23
    Date: 2017–05
  9. By: Michael Kirchler (Department of Banking and Finance, University of Innsbruck; Department of Economics, University of Gothenburg); Stefan Palan (Department of Banking and Finance, University of Graz; Department of Banking and Finance, University of Innsbruck)
    Abstract: Reciprocation of monetary gifts is well-understood in economics. In contrast, there is little research on reciprocal behavior following immaterial gifts like compliments. We close this gap and investigate how employees reciprocate after receiving immaterial and material gifts. We purchase (1) ice cream from fast food restaurants, and (2) durum doner, a common lunch snack, from independent vendors. Prior to the food's preparation, we either compliment or tip the salesperson. Salespersons reciprocate compliments with higher product weight than in a control treatment. This reciprocal behavior grows over repeated transactions. Tips have a stronger level effect which marginally decreases over time.
    Date: 2016–05–10

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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