nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒10‒22
ten papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. The Ghost of Institutions Past: Tax Evasion and Asymmetric Path Dependence By Koch, Christian; Nikiforakis, Nikos; Kamm, Aaron
  2. Revealed Preferences in a Sequential Prisoners' Dilemma: A Horse-Race Between Five Utility Functions By Topi Miettinen; Michael Kosfeld; Ernst Fehr; Jörgen W. Weibull
  3. Spillover Effects of Institutions on Cooperative Behavior, Preferences, and Beliefs By Florian Engl; Arno Riedl; Roberto A. Weber
  4. Accountability one step removed By Sonntag, Axel; Zizzo, Daniel John
  5. Choking Under Pressure in Front of a Supportive Audience: Evidence from Professional Biathlon By Harb-Wu, Ken; Krumer, Alex
  6. Cooperation in public goods games: Enhancing effects of group identity and competition By Horstmann, Elaine; Blankenberg, Ann-Kathrin; Schneider, Tim
  7. Partners in Crime: Diffusion of Responsibility in Antisocial Behaviors By Behnk, Sascha; Hao, Li; Reuben, Ernesto
  8. Disapproval Aversion or Inflated Inequity Acceptance? The Impact of Expressing Emotions in Ultimatum Bargaining By Josie I Chen; Kenju Kamei
  9. The effect of information on social preferences towards an outgroup of refugees: A field experiment By Bajrami, Leon; Loschelder, David D.; Mechtel, Mario
  10. Too Lucky to be True - Fairness Views under the Shadow of Cheating By Stefania Bortolotti; Ivan Soraperra; Matthias Sutter; Claudia Zoller

  1. By: Koch, Christian; Nikiforakis, Nikos; Kamm, Aaron
    Abstract: In this study, we present evidence from a novel tax experiment featuring multiple equilbria. In the field, countries such as Greece seem to be stuck in a bad equilibrium with persistent high tax evasion while countries such as Germany seem to be in good equilibrium with persistent high compliance. Relatedly, our setting enables us to study our lab societies’ initial equilibrium selection and to what extent their compliance level is path dependent, i.e. depends on historical experience.
    JEL: C92 H26
    Date: 2017
  2. By: Topi Miettinen; Michael Kosfeld; Ernst Fehr; Jörgen W. Weibull
    Abstract: We experimentally investigate behavior and beliefs in a sequential prisoner’s dilemma. Each subject had to choose an action as first-mover and a conditional action as second-mover. All subjects also had to state their beliefs about others’ second-mover choices. We find that subjects’ beliefs about others’ choices are fairly accurate on average. Using the elicited beliefs, we compare the explanatory power of a few current models of social and moral preferences. The data show clear differences in explanatory power between the preference models, both without and with control for the number of free parameters. The best-performing models explain about 80% of observed behavior. We use the estimated preference parameters to identify biases in subjects’ expectations. We find a consensus bias (whereby subjects believe others behave like themselves) and a certain optimism (whereby subjects overestimate probabilities for favorable outcomes), the former being about twice as strong as the second.
    Keywords: cooperation, prisoners’ dilemma, other-regarding preferences, categorical imperative, consensus effect, optimism
    JEL: C72 C90 D03 D84
    Date: 2017
  3. By: Florian Engl; Arno Riedl; Roberto A. Weber
    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
  4. By: Sonntag, Axel; Zizzo, Daniel John
    Abstract: In a repeated real effort team production experiment workers receive a distorted signal about their co-players’ previous efforts. We vary the degree to which production can be directly traced back to a participant’s real or randomly drawn effort level. We find that individuals produce much less and the decline of contributions over time is significantly steeper under high as compared to low accountability. In an additional endogenous accountability condition observe the highest effort level.
    JEL: C91 D82 M54
    Date: 2017
  5. By: Harb-Wu, Ken; Krumer, Alex
    Abstract: Performing in front of a supportive audience increases motivation. However, it also creates a psychological pressure, which may impair performance, especially in precision tasks. In this paper we exploit a unique setting in which professionals compete in a real-life contest with high monetary rewards in order to assess how they respond to the presence of a supportive audience. Using the task of shooting in sprint competitions of professional biathlon events over the period of sixteen years, our fixed effects estimations show that high-profile biathletes miss significantly more shots when competing in front of a supportive audience. Our results are in line with the hypothesis that a friendly environment induces individuals to choke when performing skill-based tasks.
    Keywords: Choking under pressure; Paradoxical performance effects on incentives; Social pressure; Biathlon; Home advantage
    JEL: M54 Z13
    Date: 2017–10
  6. By: Horstmann, Elaine; Blankenberg, Ann-Kathrin; Schneider, Tim
    Abstract: A lot of economic and social situations can be described as contests in which agents need to distribute scare resources. Individual behavior plays an important role within these situations, while identity strongly impacts on behavior. This paper asks how group identity impacts the provision of a public good in a contest situation with different prize sharing rules. We show that group identity significantly increases contributions. Moreover, it turns out that identity affects how subjects react to different prize sharing rules. Our findings contribute to an increased understanding of the nature of group identity and its impact on economic behavior.
    Keywords: group identity,contest,public goods game,multi-level interaction,experiment
    Date: 2017
  7. By: Behnk, Sascha (University of Zurich); Hao, Li (University of Arkansas, Fayetteville); Reuben, Ernesto (New York University, Abu Dhabi)
    Abstract: Using a series of sender-receiver games, we find that two senders acting together are willing to behave more antisocially towards the receiver than single senders. This result is robust in two contexts: when antisocial messages are dishonest and when they are honest but unfavorable. Our results suggest that diffusion of responsibility is the primary reason for the increased antisocial behavior as our experimental design eliminates competing explanations. With a partner in crime, senders think that behaving antisocially is more acceptable and experience less guilt. Importantly, we identify a crucial condition for the increased antisocial behavior by groups: the partner in crime must actively participate in the decision-making. Our results have important implications for institutional design and promoting prosocial behaviors.
    Keywords: diffusion of responsibility, antisocial behavior, moral norms, guilt aversion
    JEL: D70 D91 C92 D63
    Date: 2017–09
  8. By: Josie I Chen (National Taipei University); Kenju Kamei (Durham Business School)
    Abstract: Past experimental research has shown that when rating systems are available, buyers are more generous in accepting unfair offers in ultimatum bargaining. But it at the same time suggests that sellers behave more fairly to avoid receiving negative feedbacks. This paper experimentally studies which effect is stronger with a rating system: buyers’ inflated inequity acceptance or sellers’ disapproval aversion. We explore this question by varying the information condition on buyers’ side. Our experiment shows that in the setup where the size of pie is common knowledge to both buyers and sellers, when a rating system is present, the sellers exhibit disapproval aversion but the buyers do not raise inequity acceptance. But on the other hand, when only sellers are aware of the size of the pie, sellers behave aggressively to exploit buyers and their behaviors do not change by the presence of a rating system, but instead, buyers raise inequity acceptance significantly with the rating system present. We discuss that these results can be explained by a theoretical model with sellers’ social disapproval aversion and buyers’ disappointment aversion, along with the players’ inequality aversion.Classification-JEL: C91, D03, D82, M21
    Keywords: experiment, ultimatum game, emotion, rating, disapproval aversion
    Date: 2017–10
  9. By: Bajrami, Leon; Loschelder, David D.; Mechtel, Mario
    Abstract: Previous research has shown that individuals discriminate against outgroup members in economic decision-tasks (e.g., Chen and Li 2009, Hett et al. 2017, see also Social Identity Theory, Tajfel and Turner 1979). In this paper, we examine senders’ economic decisions in a dictator game, given that the receiver belongs to a refugee outgroup. First, we find that providing stylized information about the perspective of the receiver influences senders’ social preferences. Second, we show that political preferences matter substantially. Our data reveal that senders’ political orientation moderates the effect of information on their social preferences: While the information treatment strengthens social preferences towards outgroup members for more left-wing oriented participants, the treatment effect on participants who favor more right-wing parties is even negative. Our experiment allows to derive policy implications on how attitudes towards refugees could be altered.
    Keywords: outgroup discrimination,social identity,social preferences,refugees,information,field experiment
    Date: 2017
  10. By: Stefania Bortolotti; Ivan Soraperra; Matthias Sutter; Claudia Zoller
    Abstract: The steady increase in inequality over the past decades has revived a lively debate about what can be considered a fair distribution of income. Public support for the extent of redistribution typically depends on the perceived causes of income inequality, such as differences in effort, luck, or opportunities. We study how fairness views and the extent of redistribution are affected by a hitherto overlooked, but relevant factor: immoral self-serving behavior that can lead to increased inequality. We focus on situations in which the rich have potentially acquired their fortunes by means of cheating. In an experiment, we let third parties redistribute resources between two stakeholders who could earn money either by choosing a safe amount or by engaging in a risky, but potentially more profitable, investment. In one treatment, the outcome of the risky investment is determined by a random move, while in another treatment stakeholders can cheat to obtain the more profitable outcome. Although third parties cannot verify cheating, we find that the mere suspicion of cheating changes fairness views of third parties considerably and leads to a strong polarization. When cheating opportunities are present, the share of subjects redistributing money from rich to poor stakeholders triples and becomes as large as the fraction of libertarians - i.e., participants who never redistribute. Without cheating opportunities, libertarian fairness views dominate, while egalitarian views are much less prevalent. These results indicate that fairness views and attitudes towards redistribution change significantly when people believe that income inequality is the result of cheating by the rich.
    Keywords: fairness views, redistribution, unethical behavior, inequality, experiment
    JEL: C91 D63 D81 H26
    Date: 2017

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