nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒08‒20
ten papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. The effects of punishment in dynamic public-good games By Bettina Rockenbach; Irenaeus Wolff
  2. "Governing Collective Action in the Face of Observational Error" By Thomas Markussen; Louis Putterman; Liangjun Wang
  3. Tailored Feedback and Worker Green Behavior: Field Evidence from Bus Drivers By Adriaan (A.R.) Soetevent; Gert-Jan Romensen
  4. Motivational Goal Bracketing: An Experiment By Alexander K. Koch; Julia Nafziger
  5. Evolution of Trust and Trustworthiness between Cooperators and Non-Cooperators in Public Goods : Evidence from Field Experiment: Ethiopia By Kitessa, Rahel Jigi
  6. Risk Preference, Time Preference, and Salience Perception By Jonathan W. Leland; Mark Schneider
  7. Minimal Frames and Transparent Frames for Risk, Time, and Uncertainty By Jonathan W. Leland; Mark Schneider; Nathaniel Wilcox
  8. On the effect of business and economic university education on political ideology : An empirical note By Delis, Manthos D.; Hasan, Iftekhar; Iosifidi, Maria
  9. Lucky Numbers in Simple Games By Irenaeus Wolff
  10. Behavioral Characterizations of Naiveté for Time-Inconsistent Preferences By David S. Ahn; Ryota Iijima; Todd Sarver

  1. By: Bettina Rockenbach; Irenaeus Wolff
    Abstract: In the evolution of human cooperation, the enforcement of social norms was of vital importance. The punishment of norm violators has two aspects: to immediately harm the violator and to increase the violator’s future cooperativeness. Abundant experimental evidence has demonstrated the success of peer-to-peer punishment for the establishment of stable cooperation. Yet, these studies largely ignore the dynamic aspect: punishment not only destroys today’s resources or abilities, but also reduces the potential for future cooperativeness. If, for example, a hunter who stayed away from today’s hunt is punished physically, this is harmful not only today, but may also limit the physical strength available for tomorrow’s hunt. Thus, although the hunter may be more willing to cooperate in the future, his future potential for cooperation is reduced through the punishment. Here, we experimentally study the role of punishment for cooperation in dynamic public goods games, where past payoffs determine present contribution capabilities. We show that the beneficial role of punishment possibilities for cooperation success is highly fragile. Successful cooperation seems to hinge on the presence of a common understanding on how punishment should be used. If high-contributors punish too readily, the group likely gets on a wasteful path of punishment and retaliation. On the other hand, if punishment is administered more patiently, even initially uncooperative groups thrive. Hence, in dynamic contexts when today’s punishment also determines tomorrow’s cooperation abilities, it seems of crucial importance that groups agree on the right “dose†of sanctions for punishment to successfully support sustainable cooperation, e.g. by establishing a social norm of when and how to use punishment against free-riders .
    Keywords: Cooperation, Dynamic game, Punishment, Retaliation, Endowment endogeneity, Experiment
    Date: 2017
  2. By: Thomas Markussen; Louis Putterman; Liangjun Wang
    Abstract: We present results from a repeated public goods experiment where subjects choose by vote one of two sanctioning schemes peer-to-peer (informal) or centralized (formal). We introduce, in some treatments, a moderate amount of noise (a 10 percent probability that a contribution is reported incorrectly) affecting either one or both sanctioning environments. We find that the institution with more accurate information is always by far the most popular, but noisy information undermines the popularity of peer-to-peer sanctions more strongly than that of centralized sanctions. This may contribute to explaining the greater reliance on centralized sanctioning institutions in complex environments.
    Date: 2017
  3. By: Adriaan (A.R.) Soetevent (University of Groningen, The Netherlands; Tinbergen Institute, The Netherlands); Gert-Jan Romensen (University of Groningen, The Netherlands;)
    Abstract: How to engage workers in conservation efforts when the company pays the bill? In a field experiment with 409 bus drivers, we investigate the potential of targeted peer-comparison feedback and on-the-road coaching. Drivers receive individualized reports with peer-comparison messages on multiple driving dimensions. In addition, coaches quasi randomly provide drivers with in person coaching moments on the bus. Based on 800,000 trip-level observations, we find that the targeted peer-comparison treatments do not improve driving. On-the-road coaching significantly improves driving on multiple dimensions but only temporarily. Further analysis reveals negative interaction effects between the two programs.
    Keywords: peer comparisons; coaching; worker motivation; fuel conservation
    JEL: D2 M5 Q5
    Date: 2017–08–03
  4. By: Alexander K. Koch (Department of Economics and Business Economics, Aarhus University, Denmark); Julia Nafziger (Department of Economics and Business Economics, Aarhus University, Denmark)
    Abstract: We study in an online, real-effort experiment how the bracketing of non-binding goals affects performance in a work-leisure self-control problem. We externally induce the goal bracket - daily goals or a weekly goal - and within that bracket let subjects set goals for how much they want to work over a one-week period. Our theoretical model predicts (i) that weekly goals create incentives to compensate for a lower than desired performance today with the promise to work harder tomorrow, whereas daily goals exclude such excuses; (ii) that subjects with daily goals set higher goals in aggregate and work harder than those with weekly goals. Our data support these predictions. Surprisingly, however, when goals are combined with an externally enforced commitment that requires subjects to spend less than a minute each day on the task to get started working, performance deteriorates because of high dropout rates from the task.
    Keywords: Self-control, goals, narrow bracketing, commitment devices, real effort, online experiment
    JEL: D03 D81 D91
    Date: 2017–08–25
  5. By: Kitessa, Rahel Jigi (Tilburg University, Center For Economic Research)
    Abstract: The standard economic theory predicts that collective action problem arise because the selfish agents have no incentive to contribute to public goods. However, considerable shares of mankind, conditional cooperators, contribute to public goods as revealed by numerous empirical and experimental findings. Ostrom (2000) revised collective action problems predicts that as time passes with proper social norm institution in place, and information about the types of agent is known, the share of such cooperators will grow in population and the cooperative behavior will be a dominant economic decision. This is because, the conditional cooperators are in general more trusted, whereas, selfish agents are less trusted which enables the cooperators to drive higher payoff. I tested this hypothesis in a setting that let participants who are members of collaborative forest management group (CFM), and non- members (non-CFM) to play a trust game. Using this experiment, the finding in this study support the hypothesis that high trust is placed on the cooperators than non-cooperators. Therefore, the cooperator type receives more money, but send and return less to non-cooperators which allow them to receive consistently higher pay off.
    Keywords: collective action; trust and trustworthiness; field experiment; forestry; public goods
    JEL: C12 C93 D64 D71 H41 O31
    Date: 2017
  6. By: Jonathan W. Leland; Mark Schneider
    Abstract: A model of decision making is introduced that provides a unified approach for predicting choices under risk and over time. The model predicts systematic departures from expected utility and discounted utility using the same mathematical structure and the same psychological intuition and shows that a dozen diverse choice anomalies can be given a common underlying explanation. The model weights attribute differences both by their importance (consistent with expected utility and discounted utility) and by their salience or similarity (consistent with procedural models based on heuristics), and so provides a bridge between rational and heuristic representations of decision making.
    Keywords: Framing Effects, Risk, Time, Ambiguity
    JEL: D81 D91
    Date: 2017
  7. By: Jonathan W. Leland; Mark Schneider; Nathaniel Wilcox
    Abstract: It has been argued that behavior differs between transparent and nontransparent representations of a decision. However, the notion of a ‘transparent representation’ has not been precisely defined. We address this gap by providing formal definitions of ‘transparent frames’ for risk and time, establishing their uniqueness, presenting an approach to construct such frames, and comparing these frames to the ‘standard’ presentation format. Our typology of frames provides a logic for predicting systematic shifts in risk and time preferences as well as changes in the violation rates of rational choice theory. We conduct an experiment for choice under risk to investigate the framing effect between transparent and ‘standard’ frames and find such framing to be an important source of non-random variation in observed risk preferences. We also extend our approach to choice under uncertainty and derive the novel prediction that ambiguity aversion is frame dependent, a result supported by recent experimental evidence.
    Keywords: Risk, Time, Salience, Behavioral Biases
    JEL: D81 D91
    Date: 2017
  8. By: Delis, Manthos D.; Hasan, Iftekhar; Iosifidi, Maria
    Abstract: We empirically test the hypothesis that a major in economics, management, business administration or accounting (for simplicity referred to as business/economics) leads to more-conservative (right-wing) political views. We use a panel dataset of individuals (repeated observations for the same individuals over time) living in the Netherlands, drawing data from the Longitudinal Internet Studies for the Social Sciences from 2008 through 2013. Our results show that when using a simple fixed effects model, which fully controls for individuals’ time-invariant traits, any statistically and quantitatively significant effect of a major in business/economics on the political ideology of these individuals disappears. We posit that, at least in our sample, there is no evidence for a causal effect of a major in business/economics on individuals’ political ideology.
    JEL: I21 M2 D72
    Date: 2017–08–11
  9. By: Irenaeus Wolff
    Abstract: Simple game structures such as coordination, discoordination, hide-and seek, and Colonel-Blotto games have been used to model a wide range of economically relevant situations. Yet, Nash-equilibrium, and alternative theories that have been proposed in the literature, notoriously fail to explain observed behaviorinthesegames. Thispaperproposesabounded-rationalityapproachinwhich players lexicographically employ team reasoning, choose ‘lucky numbers’ (the choice they would pick in a lottery), and randomise uniformly. This three-step procedure is able to organise the data across many diferent frames for coordination, discoordination, and hide-and-seek games. Moreover, it predicts three general regularities that bear out on the existing data and additional data from a Colonel-Blotto game and a Rock-Paper-Scissors-type of game.
    Keywords: Bounded Rationality, Level-k, Salience, Heuristic, Hide & Seek, Discoordination, Rock-Paper-Scissors, Colonel Blotto, Representativeness
    Date: 2017
  10. By: David S. Ahn (University of California, Berkeley); Ryota Iijima (Cowles Foundation, Yale University); Todd Sarver (Duke University)
    Abstract: We introduce and characterize a recursive model of dynamic choice that accommodates naiveté about present bias. The model incorporates costly self-control in the sense of Gul and Pesendorfer (2001) to overcome the technical hurdles of the Strotz representation. The important novel condition is an axiom for naiveté. We first introduce appropriate definitions of absolute and comparative naiveté for a simple two-period model, and explore their implications for the costly self-control model. We then extend this definition for infinite-horizon environments, and discuss some of the subtleties involved with the extension. Incorporating the definition of absolute naiveté as an axiom, we characterize a recursive representation of naive quasi-hyperbolic discounting with self-control for an individual who is jointly overoptimistic about her present-bias factor and her ability to resist instant gratification. We study the implications of our proposed comparison of naiveté for the parameters of the recursive representation. Finally, we discuss the obstacles that preclude more general notions of naiveté, and illuminate the impossibility of a definition that simultaneously incorporates both random choice and costly self-control. devices.
    Keywords: Naive, Sophisticated, Self-control, Quasi-hyperbolic discounting
    JEL: D11 D91
    Date: 2017–08

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