nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒07‒02
four papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. The effect of risk attitudes on search behavior: A laboratory search experiment By Takahiro Miura; Keigo Inukai; Masaru Sasaki
  2. The impact of incentives on prosocial behavior: An experimental investigation with German and Chinese subjects By Yang, Guanzhong
  3. Grade Expectations: Rationality and Overconfidence By Jan R. Magnus; Anatoly A. Peresetsky
  4. One Size Fits All? Gender Differences in the Effect of Subjective Feedback By Agnes Szabo-Morvai; Anna Lovasz; Ewa Cukrowska-Torzewska; Mariann Rigo; Andrea Kiss

  1. By: Takahiro Miura (Graduate School of Economics, Osaka University); Keigo Inukai (Osaka University, ISER); Masaru Sasaki (Graduate School of Economics, Osaka University. IZA.)
    Abstract: This paper tests the effect of risk preferences on search activities by using a labo- ratory experiment. We used an infinite-horizon sequential search model with no recall in which an individual gains over search. We elicit the risk preferences from observed search activities of participants and from the multiple price list (MPL) method. We found the statistically significant effect of risk preferences elicited from the MPL method on the duration of search. The search duration is on average shorter for a risk averse individual than for risk loving one, which is consistent with the theoretical prediction. The significant effect of risk preferences on search activities has not been observed in the previous literature that used search model with recall in which an individual pays from the initial endowment over search (Schunk 2009, Schunk and Winter 2009). Therefore, the correlation between risk preferences and search activities depends on the type of search models.
    Keywords: Risk preference, Sequential search, MPL
    JEL: D81 D83
    Date: 2017–06
  2. By: Yang, Guanzhong
    Abstract: Economists believe in (monetary) incentives. However, in the specialized area of prosocial behaviours, (monetary) incentives could backfire because extrinsic motivation might crowd out intrinsic motivation. Moreover, national differences in the perception of incentives should also be considered, taking the cultural background of individuals into account. In this project, we ran a real effort experiment in Germany and in China. In addition to an extrinsic monetary incentive (personal payment) to the subjects, we made a donation to UNICEF, and the amount of the donation depended on the effort of the subjects, which served as an intrinsic motivation. The results indicate that with respect to activities with a prosocial element, Germans tended to exert a high level of effort, regardless of the alternation of the art and the level of their payoff; in contrast, the Chinese did react to extrinsic monetary incentives and exerted more effort with a linear payment or if the level of payment was high. Females exerted significantly more effort than males, and this was true for both the German and Chinese subjects. The last finding is that the Chinese were more motivated by a fixed non-monetary payment than a fixed monetary payment, if the level of payment was relatively low.
    Keywords: monetary incentives,prosocial behaviour,intrinsic and extrinsic motivation
    JEL: C91 D64 L31
    Date: 2017
  3. By: Jan R. Magnus (Vrije Universiteit Amsterdam and Tinbergen Institute, The Netherlands); Anatoly A. Peresetsky (National Research University Higher School of Economics, Moscow, Russia)
    Abstract: Overconfidence seems to be an essential aspect of human nature, and one way to study overconfidence is to consider students' forecasts of their exam grades. Part of a student's grade expectation is based on the student's previous academic achievements; what remains can be interpreted as (over)confidence. In this paper we study overconfidence using a sample of about five hundred second-year undergraduate students enrolled in a statistics course in Moscow. The course contains three exams and each student produces a forecast for each of the three exams. Students' expectations are not rational and most of students are overconfident, which is in agreement with what most people find. Less obvious findings are that overconfidence is helpful: given the same academic achievement students with larger confidence get higher exam grades. Female students are less overconfident than male students, their forecasts are more rational, and they are also faster learners in the sense that they adjust their expectations more rapidly.
    Keywords: Rational expectations; Classroom experiment; Overconfidence; Gender difference; Persistence
    Date: 2017–06–23
  4. By: Agnes Szabo-Morvai (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and HETFA Institute); Anna Lovasz (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and ELTE University); Ewa Cukrowska-Torzewska (University of Warsaw, Faculty of Economic Sciences); Mariann Rigo (Institute of Gerontology at TU Dortmund University); Andrea Kiss (Duke University, North Carolina)
    Abstract: The effect of objective feedback on performance is often studied, while subjective feedback is largely neglected in the economics literature. We estimate the impact of positive subjective feedback - encouragement and praise - on effort and performance, and compare the effect by gender. We use a computer game, during which players are randomly chosen to be given either no feedback (control) or positive subjective feedback (treatment), and analyze the treatment effect on effort (clicks) and performance (score). Based on previous economic and psychology theories, we test the pathways through which subjective feedback can have an impact: on (1) effort, due to the updating of expected performance or direct (dis)utility from the feedback, or (2) marginal productivity. The results point to significant differences in the mean effects of subjective feedback by gender. For women, encouragement has a significant positive effect while praise has a significant negative effect on performance, while men are less responsive to subjective feedback in general. Gender differences are mostly explained by different confidence distributions, while there are no gender differences in treatment effects if confidence level is held fixed. The effects are mostly realized through changes in effort. These results suggest that better targeted supervisory communication in schools or workplaces can improve the performance of lower-confidence individuals and thereby decrease the gender gap in performance.
    Keywords: gender differences, supervisory feedback, experimental economics
    JEL: C90 D03 J16 M54
    Date: 2017–06

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