nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒11‒12
thirteen papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Beyond "Social Contagion": Associational Diffusion and the Emergence of Cultural Variation By Goldberg, Amir; Stein, Sarah K.
  2. Nudging Generosity: Choice Architecture and Cognitive Factors in Charitable Giving By Schulz, Jonathan F.; Thiemann, Petra; Thöni, Christian
  3. Creating an efficient culture of cooperation By Ernst Fehr; Tony Williams
  4. I (Don't) Like You! But Who Cares? Gender Differences in Same Sex and Mixed Sex Teams By Leonie Gerhards; Michael Kosfeld
  5. Do Professional Norms in the Banking Industry Favor Risk-taking? By Alain Cohn; Ernst Fehr; Michel André Maréchal
  6. Does Exposure to Unawareness Affect Risk Preferences? A Preliminary Result By Wenjun Ma; Burkhard Schipper
  7. An experimental test of reporting systems for deception By Sascha Behnk; Iván Barreda-Tarrazona; Aurora García-Gallego
  8. An Experimental Test of Gender Differences in Charitable Giving: Empathy Is at the Heart of the Matter By van Rijn, Jordan; Quinones, Esteban J.; Barham, Bradford L.
  9. Cultivating Optimism: How to Frame Your Future During a Health Challenge By Briley, Donnel A.; Rudd, Melanie; Aaker, Jennifer
  10. Field experiments on the development of time preferences By James Andreoni; Michael Kuhn; John List; Anya Samek; Charles Sprenger
  11. Laws and Norms: Experimental Evidence with Liability Rules By Bruno Deffains; Claude Fluet; Romain Espinosa
  12. An Offer You Can't Refuse? Incentives Change What We Believe By Sandro Ambuehl
  13. Efficient Institutions and Effective Deterrence: On Timing and Uncertainty of Punishment By Johannes Buckenmaier; Eugen Dimant; Ann-Christin Posten; Ulrich Schmidt

  1. By: Goldberg, Amir (Stanford University); Stein, Sarah K. (Stanford University)
    Abstract: Network models of diffusion predominantly think about cultural variation as a product of "social contagion." But culture does not spread like a virus. In this paper, we propose an alternative explanation which we refer to as "associational diffusion." Drawing on two insights from research in cognition--that meaning inheres in cognitive associations between concepts, and that such perceived associations constrain people's actions--we suggest that rather than beliefs or behaviors per-se, the things being transmitted between individuals are perceptions about what beliefs or behaviors are compatible with one another. We demonstrate that the endogenous emergence of cultural differentiation can be entirely attributable to social cognition, and does not necessitate a segregated social network or a preexisting division into groups. Our results are robust to variation in individuals' levels of conformity.
    Date: 2017–05
  2. By: Schulz, Jonathan F. (Harvard University); Thiemann, Petra (Lund University); Thöni, Christian (University of Lausanne)
    Abstract: In an experimental setup we investigate the effect of two different choice architectures on donation decisions. In the treatment group, subjects can either specify a charity of their choice, or select one from a list of five well-known charities; in the control group we do not provide a list. In a sample of 869 subjects we find a large treatment effect: Offering a list of default charities doubles the fraction of donors, as well as the revenue for charities. We find that the treatment intervention particularly affects subjects who tend to make intuitive choices.
    Keywords: charitable giving, donation, choice architecture, defaults, affective reactions
    JEL: C93 D64 H41 L3
    Date: 2017–10
  3. By: Ernst Fehr; Tony Williams
    Abstract: Throughout human history, informal sanctions by peers were ubiquitous and played a key role in the enforcement of social norms and the provision of public goods. However, a considerable body of evidence suggests that informal peer sanctions cause large collateral damage and efficiency costs. This raises the question whether peer sanctioning systems exist that avoid these costs and whether other, more centralized, punishment systems are superior and will be preferred by the people. Here, we show that efficient peer sanctioning without much need for costly punishment emerges quickly if we introduce two relevant features of social life into the experiment: (i) subjects can migrate across groups with different sanctioning institutions and (ii) they have the chance to achieve consensus about normatively appropriate behavior. We also show that subjects universally reject peer sanctioning without a norm consensus opportunity –an institution that has hitherto dominated research in this field – in favor of our efficient peer sanctioning institution or an equally efficient institution where they delegate the power to sanction to an elected judge. Migration opportunities and normative consensus building are key to the quick emergence of an efficient culture of universal cooperation because the more prosocial subjects populate the two efficient institutions first, elect prosocial judges (if institutionally possible), and immediately establish a social norm of high cooperation. This norm appears to guide subjects’ cooperation and punishment choices, including the virtually complete removal of antisocial punishment when judges make the sanctioning decision.
    Keywords: Cooperation, punishment, endogenous institutions, public goods
    JEL: D02 D03 D72 H41
    Date: 2017–10
  4. By: Leonie Gerhards; Michael Kosfeld
    Abstract: We study the effect of likability on female and male team behavior in a lab experiment. Extending a two-player public goods game and a minimum effort game by an additional pre-play stage that informs team members about their mutual likability we find that female teams lower their contribution to the public good in case of low likability, while male teams achieve high levels of cooperation irrespective of the level of mutual likability. In mixed sex teams, both females’ and males’ contributions depend on mutual likability. Similar results are found in the minimum effort game. Our results offer a new perspective on gender differences in labor market outcomes: mutual dislikability impedes team behavior, except in all-male teams.
    Keywords: gender differences, likability, experiment, team behavior
    JEL: C90 J16
    Date: 2017
  5. By: Alain Cohn; Ernst Fehr; Michel André Maréchal
    Abstract: In recent years, the banking industry has witnessed several cases of excessive risk-taking that frequently have been attributed to problematic professional norms. We conduct experiments with employees from several banks in which we manipulate the saliency of their professional identity and subsequently measure their risk aversion in a real stakes investment task. If bank employees are exposed to professional norms that favor risk-taking, they should become more willing to take risks when their professional identity is salient. We find, however, that subjects take significantly less risk, challenging the view that the professional norms generally increase bank employees’ willingness to take risks.
    Keywords: risk culture, banking industry, experiment
    JEL: G02 M14 C93
    Date: 2017
  6. By: Wenjun Ma; Burkhard Schipper (Department of Economics, University of California Davis)
    Abstract: One fundamental assumption often made in the literature on unawareness is that risk preferences are invariant to changes of awareness. We study how exposure to unawareness affects choices under risk. Participants in our experiment choose repeatedly between varying sure outcomes and a lottery in 3 phases. All treatments are exactly identical in phase 1 and phase 3, but differ in phase 2. There are five different treatments pertaining to the lottery faced in phase 2: The control treatment (i.e., a standard lottery), the treatment with awareness of unawareness of lottery outcomes but known number of outcomes, the treatment with awareness of unawareness of outcomes but with unknown number of outcomes, the treatment with unawareness of unawareness of some outcomes, and the treatment with an ambiguous lottery. We study both whether behavior differs in phase 3 across treatments (between subjects effect) and whether differences of subjects' behavior between phases 1 and phase 3 differs across treatments (within subject effects). We observe no significant treatment effects.
    Keywords: Unawareness, Awareness of unawareness, Risk aversion, Experiments
    JEL: C91 C92 D81 D87
    Date: 2017–05–02
  7. By: Sascha Behnk (Department of Banking and Finance, University of Zurich, Switzerland); Iván Barreda-Tarrazona (LEE and Economics Department, Universitat Jaume I, Castellón, Spain); Aurora García-Gallego (LEE and Economics Department, Universitat Jaume I, Castellón, Spain)
    Abstract: We use a repeated sender-receiver game in which sender behavior is revealed to future counterparts by (i) standardized computer reports or by (ii) individual reports composed by the receivers, representing a common form of consumer feedback. Compared to our baseline without reporting, computer reports reduce deception in all payoff scenarios while the effect of individually written reports is lower and in some scenarios only marginal. This comparably weaker impact can be explained by the senders’ anticipation of a high number of missing or deficient receiver reports that we find. We conclude that the precision of a reporting system has a higher importance for reducing deception than its personal character via individual feedback. Surprisingly, the reliability of computer reports is not correctly anticipated by receivers, who trust individually written reports more in the beginning and hence seem to back the wrong horse initially.
    Keywords: deception, trust, reporting systems, reputation, experiment
    JEL: D03 D63 K42
    Date: 2017
  8. By: van Rijn, Jordan (University of WI and Credit Union National Association); Quinones, Esteban J. (University of WI and Center for Demography and Ecology); Barham, Bradford L. (University of WI and Center for Demography and Ecology)
    Abstract: This study uses a dictator game with a charitable organization as the donation recipient to test whether inequality aversion, empathic concern and feelings of manipulation explain gender differences in giving found in the literature. We first explore whether we can evoke these feelings in the lab by exogenously varying the content of a charitable appeal video. Then we examine whether the evoked feelings help explain heterogeneity in giving between males and females. We find that females donate significantly more than males in the treatments that include personal stories from children, with females donating 63 percent more than males in these treatments. Using instrumental variable (IV) methods, we also show that empathic concern that results from the videos with the children's personal stories increases average donations among females but not males. Although we evoke feelings of empathic concern and inequality aversion among males, this does not translate into increases in donations; on the other hand, empathic concern among females that is evoked via treatments with children's personal stories does lead to increases in average female donations. Our study is novel in demonstrating that females not only have larger stocks of empathic concern than do males, but also donate more in response to empathic concern that results from an emotional charitable appeal featuring children's stories. This highlights the importance of empathic concern in explaining gender differences in giving found in the literature.
    Date: 2017–09
  9. By: Briley, Donnel A. (University of Sydney); Rudd, Melanie (University of Houston); Aaker, Jennifer (Stanford University)
    Abstract: Research shows that optimism can positively impact health, but when and why people feel optimistic when confronting health challenges is less clear. Findings from six studies show that the frames people adopt when thinking about health challenges influence their optimism about overcoming those challenges, and that their culture moderates this effect. In cultures where the independent self is highly accessible, individuals adopting an initiator frame (how will I act, regardless of the situations I encounter?) were more optimistic than those adopting a responder frame (how will I react to the situations I encounter?); the converse occurred for individuals from cultures where the interdependent self is highly accessible. Moreover, mediation and moderation evidence revealed that this interactive effect of culture and frame on optimism was driven by people's ability to easily imagine the recovery process. These effects held for distinct health challenges (cancer, diabetes, flood-related illness, traumatic injury) and across single-country and cross-country samples, as well as impacted positive health outcomes and decisions ranging from anticipated energy, physical endurance, and willingness to take on more challenging physical therapy to intentions to get vaccinated, stick to a doctor recommended diet, and undertake a physically strenuous vacation.
    Date: 2017–06
  10. By: James Andreoni; Michael Kuhn; John List; Anya Samek; Charles Sprenger
    Abstract: Time preferences have been correlated with a range of life outcomes, yet little is known about their early development. We conduct a field experiment to elicit time preferences of nearly 1,000 children ages 3-12, who make several inter temporal decisions. To shed light on how such primitives form, we explore various channels that might affect time preferences, from background characteristics to the causal impact of an early schooling program that we developed and operated. Our results suggest that time preferences evolve substantially during this period with younger children displaying more impatience than older children. We also find a strong association with race: black children, relative to white or Hispanic children, are more impatient. Interestingly, parents of black children are also much more impatient than parents of white and Hispanic children. Finally, assignment to different schooling opportunities is not significantly associated with child time preferences.
    Date: 2017
  11. By: Bruno Deffains; Claude Fluet; Romain Espinosa
    Abstract: We conduct an experiment where participants choose between actions that provide private benefits but may also impose losses on strangers. Three legal environments are compared: no law, strict liability for the harm caused to others and an efficiently designed negligence rule where damages are paid only when the harmful action causes a net social loss. Legal obligations are either perfectly enforced (Severe Law) or only weakly so (Mild Law), i.e.,material incentives are then nondeterrent. We investigate how legal obligations and social norms interact. Our results show that liability rules strengthen pro-social behavior and suggest that strict liability has a greater effect than the negligence rule.
    JEL: C91 K13 D03
    Date: 2017–10–30
  12. By: Sandro Ambuehl
    Abstract: Much of economics assumes that higher incentives increase participation in a transaction only because they exceed more people’s reservation price. This paper shows theoretically and experimentally that when information about the consequences is costly, higher incentives also change reservation prices to further increase participation. A higher incentive makes people gather information in a way that is more favorable to participation—as if they were persuading themselves to participate. Hence, incentives change not only what people choose, but also what they believe their choices entail. This result informs the debate about laws around the world that severely restrict incentives for transactions such as organ donation, surrogate motherhood, human egg donation, and medical trial participation. It helps bridge a gap between economists on the one hand and the policy makers and ethicists on the other.
    Keywords: incentives, repugnant transactions, information acquisition, inattention, experiment
    JEL: D03 D04 D84
    Date: 2017
  13. By: Johannes Buckenmaier; Eugen Dimant (Philosophy, Politics and Economics, University of Pennsylvania); Ann-Christin Posten; Ulrich Schmidt
    Abstract: Reducing criminal acts in society is a crucial duty of governments. Establishing punishment structures to attain this goal involves high costs. Typically, both theorists and practitioners resort to the adjustment of severity and/or certainty of punishment as effective deterrents of criminal behavior. One more cost effective, but scientifically understudied mechanism for effective deterrence is the swiftness of punishment. We carry out the first controlled economic experiment to study the effectiveness of swiftness of punishment along the following two dimensions: the timing of punishment and the timing of the resolution of uncertainty regarding punishment. Our results indicate an inverted u-shaped relation between the delay of punishment, the delay of uncertainty resolution regarding the detection of deviant behavior, and any resulting deterrence. In fact, institutions that either reveal detection and impose punishment immediately or maintain uncertainty about the state of detection and impose punishment sufficiently late deter individuals at equal rates. We conclude that the same institutional settings that are capable of reducing recidivism are also the ones deterring deviant behavior in the first place. Our results yield strong policy implications for designing effective institutions in mitigating misconduct and reducing recidivism.
    Keywords: Experiment, Illicit Behavior, Institutions, Punishment, Uncertainty
    JEL: C91 D02 D81 K42
    Date: 2017–10

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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