nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒09‒24
seven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Strategic complexity and the value of thinking By David Gill; Victoria Prowse
  2. Strategic Behavior of Moralists and Altruists, By Alger, Ingela; Weibull, Jörgen W.
  3. How uncertainty and ambiguity in tournaments affect gender differences in competitive behavior By Loukas Balafoutas; Brent J. Davis; Matthias Sutter
  4. An Impossibility Result on Nudging Grounded in the Theory of Intentional Action By Sergio Beraldo
  5. Peer effects on perseverance By Buechel, Berno; Mechtenberg, Lydia; Petersen, Julia
  6. Does self-control depletion affect risk attitudes? By Gerhardt, Holger; Schildberg-Hörisch, Hannah; Willrodt, Jana
  7. Choice with Time By João V. Ferreira; Nicolas Gravel

  1. By: David Gill; Victoria Prowse
    Abstract: Response times are a simple low-cost indicator of the process of reasoning in strategic games. In this paper, 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 categorize 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 a?ects 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. Overthinking is detrimental even though subjects who think for longer on average tend to be more successful. Finally, cognitive ability and personality have no e?ect on average response times.
    Keywords: Response time; decision time; thinking time; strategic complexity; game theory; strategic games; repeated games; beauty contest; cognitive ability; personality
    JEL: C72 C91
    Date: 2017–08
  2. By: Alger, Ingela; Weibull, Jörgen W.
    Abstract: Does altruism and morality lead to socially better outcomes in strategic interactions than selfishness? We shed some light on this complex and non-trivial issue by examining a few canonical strategic interactions played by egoists, altruists and moralists. By altruists we mean people who do not only care about their own material payoffs but also about those to others, and by a moralist we mean someone who cares about own material payoff and also about what would be his or her material payoff if others were to act like himself or herself. It turns out that both altruism and morality may improve or worsen equilibrium outcomes, depending on the nature of the game. Not surprisingly, both altruism and morality improve the outcomes in standard public goods games. In infinitely repeated games, however, both altruism and morality may diminish the prospects of cooperation, and to different degrees. In coordination games, morality can eliminate socially inefficient equilibria while altruism cannot.
    Keywords: altruism; morality; Homo moralis; repeated games; coordination games
    JEL: C73 D01 D03
    Date: 2017–08
  3. By: Loukas Balafoutas; Brent J. Davis; Matthias Sutter
    Abstract: Tournament incentives prevail in labor markets, in particular with respect to promotions. Yet, it is often unclear to competitors how many winners there will be or how many applicants compete in the tournament. While it is hard to measure how this uncertainty affects work performance and willingness to compete in the field, it can be studied in a controlled lab experiment. We present a novel experiment where subjects can compete against each other, but where the number of winners is either uncertain (i.e., unknown numbers of winners, but known probabilities) or ambiguous (unknown probabilities for different numbers of winners). We compare these two conditions with a control treatment with a known number of winners. We find that ambiguity induces a significant increase in performance of men, while we observe no change for women. Both men and women increase their willingness to enter competition with uncertainty and ambiguity, but men react slightly more than women. Overall, both effects contribute to men winning the tournament significantly more often than women under uncertainty and ambiguity. Hence, previous experiments on gender differences in competition may have measured a lower bound of differences between men and women.
    Keywords: gender, competition, uncertainty, ambiguity, experiments
    JEL: C91 D03
    Date: 2017–09
  4. By: Sergio Beraldo (Università di Napoli Federico II and CSEF)
    Abstract: I offer an impossibility result on nudging grounded in the theory of intentional action. I prove that if individuals are not open to money-pump manipulation and nudges are motivationally irrelevant, any induced choice is unintentional and just reflects the preferences of the choice architect. Autonomy is therefore violated, and nudging proves to be inconsistent with liberal principles at a fundamental level.
    Keywords: Nudging, Manipulation, Autonomy
    JEL: D03 D6
    Date: 2017–09–15
  5. By: Buechel, Berno; Mechtenberg, Lydia; Petersen, Julia
    Abstract: Successful performance – be it in school, at the job, or in sports activities – requires perseverance, i.e., persistent work on a demanding task. We investigate in a controlled laboratory experiment how an individual’s social environment affects perseverance. We find evidence for two kinds of peer effects: being observed by a peer can serve as a commitment device, while observing a peer can be informative. In particular, we show that successful peers affect perseverance positively if they communicate their success in a motivating way and negatively otherwise, while perseverance is unaffected by unsuccessful peers. Our experimental results suggest that peers affect perseverance indirectly, via influencing self-confidence. We turn to field data from an educational setting and find that students seem to be able to harness the power of peer effects, by selecting into groups that help them reach their goals.
    Keywords: Self-control; Peer Effects; Social Networks; Experiment
    JEL: C91 D90 I21 J24
    Date: 2017–09–16
  6. By: Gerhardt, Holger; Schildberg-Hörisch, Hannah; Willrodt, Jana
    Abstract: A core prediction of recent “dual-self” models is that risk attitudes depend on self-control. While these models have received a lot of attention, empirical evidence regarding their predictions is lacking. We derive hypotheses from three prominent models for choices between risky monetary payoffs under regular and reduced self-control. We test the hypotheses in a lab experiment, using a well-established ego depletion task to reduce self-control, and measuring risk attitudes via finely graduated choice lists. Manipulation checks document the effectiveness of the depletion task. We find no systematic evidence in favor of the theoretical predictions. In particular, depletion does not increase risk aversion.
    Keywords: Risk attitudes, Self-control, Ego depletion, Dual-self models, Experiment
    JEL: C91 D03 D81
    Date: 2017–09–19
  7. By: João V. Ferreira (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille); Nicolas Gravel (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille)
    Abstract: We propose a framework for the analysis of choice behavior when the later explicitly depends upon time. We relate this framework to the traditional setting from which time is absent. We illustrate the usefulness of the introduction of time by proposing three possible models of choice behavior in such a framework: (i) changing preferences, (ii) preference formation by trial and error, and (iii) choice with endogenous status-quo bias. We provide a full characterization of each of these three choice models by means of revealed preference-like axioms that could not be formulated in a timeless setting.
    Keywords: choice behavior, time, revealed preferences, changing preferences, learning by trial-and-error, inertia bias
    Date: 2017–07

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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