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on Cognitive and Behavioural Economics |
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Issue of 2017‒11‒19
nineteen papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Morone, Andrea; Temerario, Tiziana; Nemore, Francesco |
| Abstract: | In this paper we investigated group size impact on risk aversion when a majority rule is applied. Drawing on the widely used Holt and Laury’s (2002) lottery pairs, we observed a risky shift for both individual and groups regardless of their size. However, groups choices are shown to be closer to the risk-neutrality prediction. More interestingly, whereas smaller groups attitudes can be safely approximated by individual choices, larger groups reveal a statistically different risk-loving attitude. This risky shift becomes more prominent as group size increases. |
| Keywords: | Preferences; Group; Risk Attitude; Majority Rule; Laboratory. |
| JEL: | C91 C92 D1 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82453&r=cbe |
| By: | Natalia Jimenez (Universidad de Granada (Spain)); Ismael Rodriguez-Lara (Middlesex University London (United Kingdom)); Jean-Robert Tyran (Department of Economics, University of Copenhagen and University of Vienna (Austria)); Erik Wengström (University of Lund (Sweden)) |
| Abstract: | We test for the construct validity of the cognitive reflection test (CRT) by eliciting response times. We find that incorrect answers to the CRT are quicker than correct answers. At the individual level, we classify subjects into impulsive and reflective, depending on whether they choose the incorrect intuitive answer or the correct answer the majority of the time. We show that impulsive subjects complete the test quicker than reflective subjects. |
| Keywords: | cognitive ability, cognitive reflection, response time, intuitive behavior, reflective behavior |
| JEL: | C91 |
| Date: | 2017–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1724&r=cbe |
| By: | Armin Falk |
| Abstract: | Numerous signaling models in economics assume image concerns. These take two forms, as relating either to social image or self-image. While empirical work has identified the behavioral importance of the former, little is known about the role of self-image concerns. We exogenously vary self-image concerns in manipulating self-directed attention and study the impact on moral behavior. The choice context in the experiment is whether subjects inict a painful electric shock on another subject to receive a monetary payment. Three between-subjects conditions are studied. In the main treatment, subjects see their own face on the decision screen in a real-time video feed. In the two control conditions, subjects see either no video at all or a neutral video. We find that the exogenous increase in self-image concerns significantly reduces the fraction of subjects inflicting pain. |
| Keywords: | self-image, moral behavior |
| JEL: | D64 C91 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6428&r=cbe |
| By: | Bart H.H. Golsteyn; Arjan Non; Ulf Zölitz |
| Abstract: | This paper provides evidence of a novel facet of peer effects by showing how peer personality affects educational achievement. We exploit random assignment of students to university sections and find that students perform better in the presence of more persistent peers and more risk-averse peers. In particular, low-persistence students benefit from highly-persistent peers without devoting additional efforts to studying. However, highly-persistent students are not affected by the persistence of their peers. The personality peer effects that we document are distinct from other observable peer characteristics and suggest that the personality traits of peers causally affect human capital accumulation. |
| Keywords: | Personality, peer effects, non-cognitive skills |
| JEL: | I21 I24 J24 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:269&r=cbe |
| By: | Kristoffer W. Eriksen; Ola Kvaløy; Miguel Luzuriaga |
| Abstract: | We present an experimental study on how people take risk on behalf of others. We use three different elicitation methods, and study how each subject makes decisions both on behalf of own money and on behalf of another individual’s money. We find a weak tendency of lower risk-taking with others’ money compared to own money. However, subjects believe that other participants take more risk with other people’s money than with their own. At the same time, subjects on average think that others are more risk averse than themselves. The data also reveals that subjects are quite inconsistent when making risk decisions on behalf of others, indicating random behavior. A large majority of subjects alternates between taking more risk, less risk or the same amount of risk with other people’s money compared to own money. |
| Keywords: | risk-taking, other people’s money, beliefs, preferences, experiment |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6378&r=cbe |
| By: | Cameron A. Belton (University of East Anglia) |
| Abstract: | This paper implements a novel experimental design to investigate the presence of order effects across multiple valuation tasks for consumer goods, whereby earlier goods are valued more highly than later goods. The paper presents a novel explanation of order effects, relating to attention and novelty. Typically, multiple valuation tasks for consumer goods use the same good for valuation in each task. In this experiment the type of good valued in each task is varied, allowing two potential mechanisms to be disentangled: experimental novelty effects, whereby participants become less interested with completing later tasks, and good-specific novelty effects, whereby participants become less interested with the goods used in later tasks. The results find a particular importance of the first task; goods in the first task are valued significantly higher than later valued goods, evidence of experimental novelty effects, and goods of a similar type to the good in the first task are valued significantly higher than goods of a different type to the first, evidence of good-specific novelty. The paper discusses the potential implications of these findings. |
| Keywords: | order effects, attention, novelty, advanced disclosure |
| JEL: | C91 D12 D91 |
| Date: | 2017–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:17-06&r=cbe |
| By: | Francesco Fallucchi (University of East Anglia); R. Andrew Luccasen (Mississippi University for Women); Theodore L. Turocy (University of East Anglia) |
| Abstract: | We re-analyse participant behaviour in standard economics experiments studying voluntary contributions to a public good. Previous approaches were based in part on a priori models of decision-making, such as maximising personal earnings, or reciprocating the behaviour of others. Many participants however do not conform to one of these models exactly, requiring ad hoc adjustments to the theoretical baselines to identify them as belonging to a given behavioural type. We construct a typology of behaviour based on a similarity measure between strategies using hierarchical clustering analysis. We identify four clearly distinct behavioural types which together account for over 90% of participants in six experimental studies. The resulting type classification distinguishes behaviour across groups more consistently than previous approaches. |
| Keywords: | behavioural types, cluster analysis, cooperation, public goods |
| JEL: | C65 C71 H41 |
| Date: | 2017–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:17-01r&r=cbe |
| By: | Guhl, Daniel (Humboldt University Berlin); Klapper, Daniel (Humboldt University Berlin); Massner, Katharina (LMU); Spann, Martin (LMU); Stich, Lucas (LMU); Yegoryan, Narine (Humboldt University Berlin) |
| Abstract: | Psychology and economics (the mixture of which is known as behavioral economics) are two fundamental disciplines underlying marketing. Various marketing studies document the non-rational behavior of consumers, even though behavioral biases might not always be consistently termed or formally described. In this review, we identify empirical research that studies behavioral biases in marketing. We summarize the key findings according to three classes of deviations (i.e., non-standard preferences, non-standard beliefs, and non-standard decision-making) and the marketing mix instruments (i.e., product, price, place, and promotion). We thereby introduce marketing researchers to the theoretical foundation of and terminology used in behavioral economics. For scholars from behavioral economics, we provide ready access to the rich empirical, applied marketing literature. We conclude with important managerial implications resulting from the behavioral biases of consumers, and we present avenues for future research. |
| Keywords: | marketing; behavioral economics; behavioral biases; review; |
| Date: | 2017–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:51&r=cbe |
| By: | Felix Albrecht; Sebastian Kube; Christian Traxler |
| Abstract: | We explore the relationship between individuals’ disposition to cooperate and their inclination to engage in peer punishment as well as their relative importance for mitigating social dilemmas. Using a novel strategy-method approach we identify individual punishment patterns and link them with individual cooperation patterns. Classifying N = 628 subjects along these two dimensions documents that cooperation and punishment patterns are intuitively aligned for most individuals. However, the data also reveal a sizable share of free-riders that punish pro-socially and conditional cooperators that do not engage in punishment. Analyzing the interplay between types in an additional experiment, we show that pro-social punishers are more crucial for achieving cooperation than conditional cooperators. Incorporating information on punishment types explains large amounts of the between and within group variation in cooperation. |
| Keywords: | strategy method, punishment patterns, type classification, conditional cooperation, public-goods game |
| JEL: | C90 D03 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6284&r=cbe |
| By: | Nadine Chlass (University of Jena); Peter G. Moffatt (University of East Anglia) |
| Abstract: | Which preference underlies giving in dictator games? To date, the experimental evidence has either been interpreted as a preference over the distribution of pay-offs, or as an experimenter demand effect. We show that under strict dictator-dictator as well as strict dictator-recipient anonymity, giving in dictator games springs from a preference over the distribution of decision rights. In contrast, concerns which trigger experimenter demand (Andreoni and Bernheim 2009) are negatively correlated with dictator game giving. Our experiments cover a series of dictator game variants which have sparked the experimenter demand debate. In addition, we identify the sets of ethical ideals that dictators em-ploy to derive the 'right' course of action in a formal moral judgement test and model dictator transfers econometrically by means of dictators' actual ethical ideals. Our results explain the lion’s share of results from the literature: lower transfers when dictators earn the pie (Cherry et al. 2002); lower transfers when 'take' options are available (List 2007; Bardsley 2008); lower transfers when anonymity is lifted (Hoffmann et al. 1994); generous dictators consistently pre-ferring to avoid the game altogether, if given the option (Lazear et al. 2012), and findings that social norms and beliefs cause dictator transfers (Krupka and Weber 2013; Di Tella et al. 2015; Kimbrough and Vostroknutov 2015). |
| Keywords: | altruism, dictator games, moral judgement, experimenter demand effect, equality of decision rights, purely procedural preferences |
| JEL: | C91 D63 D64 |
| Date: | 2017–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:17-05&r=cbe |
| By: | Daniel Levy (International School of Economics at Tbilisi State University; Department of Economics, Bar-Ilan University; Department of Economics, Emory University; Rimini Center for Economic Analysis, ITALY;); Avichai Snir (Department of Banking and Finance, Netanya Academic College, Netanya 42365, ISRAEL) |
| Abstract: | Recent studies in psychology and neuroscience find that fictional works exert strong influence on readers and shape their opinions and worldviews. We study the Potterian economy, which we compare to economic models, to assess how Harry Potter books affect economic literacy. We find that some principles of Potterian economics are consistent with economists’ models. Many others, however, are distorted and contain numerous inaccuracies, which contradict professional economists’ views and insights, and contribute to the general public’s biases, ignorance, and lack of understanding of economics. |
| Keywords: | Economic and Financial Literacy, Political Economy, Public Choice, Rent Seeking, Folk Economics, Harry Potter, Social Organization of Economic Activity, Literature, Fiction, Potterian Economy, Potterian Economics, Popular Opinion |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:tbs:wpaper:17-002&r=cbe |
| By: | Bogliacino, Francesco; Codagnone, Cristiano |
| Abstract: | The article discusses whether and to what extent experiments can contribute to a research paradigm based on the study of human behaviour in complex evolving environments and on the problem of asymmetric adjustment among different components of economic system along certain trajectories, focusing on the possibility that experimental evidence may represent an external consistency check on this type of heterodox modelling. It considers the evidence on rationality of human agents, and the possibility to identify a microfoundation alternative to homo oeconomicus, discussing the evidence on humans as strong reciprocators, as trusting individuals and as embedded in social norms. |
| Keywords: | Experiments; Causality; Heuristics; Learning; Bounded Rationality; Altruism; Punishment; Trust; Norms |
| JEL: | C18 C9 D1 D3 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82479&r=cbe |
| By: | Daniela Di Cagno (LUISS, Rome); Arianna Galliera (LUISS, Rome and Politecnico di Milano); Werner Güth (LUISS, Rome and Max Planck Institute, Bonn); Noemi Pace (Department of Economics, University Of Venice Cà Foscari) |
| Abstract: | This paper attempts to identify behavioral patterns and compare their average success considering several criteria of bounded rationality. Experimentally observed choice behavior in various decision tasks is used to assess heterogeneity in how individual participants respond to 15 randomly ordered portfolio choices, each of which is experienced twice. Treatments differ in (not) granting probability information and in (not) eliciting aspirations. Since in our setting neither other regarding concerns nor risk attitude matter and probability of the binary chance move is (optimal) choice-irrelevant, categorizing decision types relies on parameter dependence and choice adaptations. We find that most participants reduce systematically sub-optimality when following the identified criteria. |
| Keywords: | (Un)Bounded Rationality, Satisficing, Experiments, Heterogeneity |
| JEL: | D03 D81 C91 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2017:23&r=cbe |
| By: | Sandro Casal (University of Milan); Francesco Fallucchi (University of East Anglia); Simone Quercia (University of Bonn) |
| Abstract: | We experimentally investigate the role of responders' moral concerns in three-player ultimatum bargaining. In our experiment, proposers can increase their share of the pie at the expenses of an NGO that conducts humanitarian aid in emergency areas. We find that responders are not willing to engage in 'immoral' transactions only when fully informed about proposers' behavior toward the NGO. Under complete information, their willingness to reject offers increases with the strength of the harm to the NGO. Moreover, the possibility to nullify the effects of the negative externality through rejection further increases their willingness to reject. We show that the latter result is better explained by a model of consequentialist moral concerns toward the NGO rather than deontological morality about own actions. |
| Keywords: | three-player ultimatum game, moral reasoning, experiment |
| JEL: | C72 C91 D6 |
| Date: | 2017–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:16-05r&r=cbe |
| By: | Sheheryar Banuri (University of East Anglia); Stefan Dercon (Blavatnik School of Government and Centre for the Study of African Economies); Varun Gari (The World Bank) |
| Abstract: | A large literature focuses on the biases of individuals and consumers, as well as "nudges" and other policies that can address those biases. Although policy decisions are often more consequential than those of individual consumers, there is a dearth of studies on the biases of policy professionals: those who prepare and implement policy on behalf of elected politicians. Experiments conducted on a novel subject pool of development policy professionals (public servants of the World Bank and the Department for International Development in the UK) show that policy professionals are indeed subject to decision making traps, including sunk cost bias, the framing of losses and gains, frame-dependent risk-aversion, and, most strikingly, confirmation bias correlated with ideological priors, despite having an explicit mission to promote evidence- informed and impartial decision making. These findings should worry policy professionals and their principals in governments and large organizations, as well as citizens themselves. A further experiment, in which policy professionals engage in discussion, shows that deliberation may be able to mitigate the effects of some of these biases. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:17-07&r=cbe |
| By: | Adena, Maja (WZB); Huck, Steffen (WZB); Rasul, Imran (UCL) |
| Abstract: | We present evidence from a natural field experiment designed to shed light on whether individual behavior is consistent with a neoclassical model of utility maximization subject to budget constraints. We do this through the lens of a field experiment on charitable giving. We find that the behavior of at least 80% of individuals, on both the extensive and intensive margins, can be rationalized within a standard neoclassical choice model in which individuals have preferences, defined over own consumption and their contribution towards the charitable good, satisfying the axioms of revealed preference. |
| Keywords: | natural field experiment; revealed preference; |
| JEL: | C93 D01 D12 D64 |
| Date: | 2017–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:54&r=cbe |
| By: | Hafner, Lucas; Reif, Simon; Seebauer, Michael |
| Abstract: | Recent experimental studies analyze the behavior of physicians towards patients and find that physicians care for their own profit as well as patient benefit. In this paper, we extend the experimental analysis of the physician decision problem by adding a third party representing the health insurance which finances medical service provision. Our results show that physicians take into account the payoffs of the third party, which can lead to underprovision of medical services. We conduct a laboratory experiment in neutral as well as medical framing using students and medical doctors as subjects. Subjects in the medically framed experiments behave weakly more patient orientated in contrast to neutral framing. A sample of medical doctors exhibits comparable behavior to students with medical framing. |
| Keywords: | health economic experiment,framing,physician behavior,prospective payment schemes |
| JEL: | C91 C93 I11 I18 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwqwdp:182017&r=cbe |
| By: | Kurz, Verena (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | Changing dietary habits to reduce the consumption of meat is considered to have great potential to mitigate food-related greenhouse gas (GHG) emissions. To test if nudging can increase the consumption of vegetarian food, I conducted a field experiment with two university restaurants. At the treated restaurant, the salience of the vegetarian option was increased by changing the menu order, and by placing the dish at a spot visible to customers. The other restaurant served as a control. Daily sales data on the three main dishes sold were collected from September 2015 until June 2016. The experiment was divided into a baseline, an intervention, and a reversal period where the setup was returned to its original state. Results show that the nudge increased the share of vegetarian lunches sold by around 6 percentage points. The change in behavior is partly persistent, as the share of vegetarian lunches sold remained 4 percentage points higher than during the baseline period after the original setup was reinstated. The changes in consumption reduced GHG emissions from food sales around 5 percent. |
| Keywords: | nudging; field experiment; meat consumption; climate change mitigation |
| JEL: | C93 D03 D12 Q50 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0712&r=cbe |
| By: | Shaun P. Hargeaves Heap (King's College London); Abhijit Ramalingam (University of East Anglia); Brock V. Stoddard (University of South Dakota) |
| Abstract: | This paper examines with an experiment a new way that inequality and competition may interact to affect productivity: through team public goods contributions. While inequality within a team diminishes team cooperation in the absence of competition, we find there is no effect of inequality when teams compete. Competition boosts cooperation and more so in unequal teams. Thus, a decline in competition accompanied by growing inequality has a doubly adverse effect on productivity. The difference in the effect of inequality is driven by the behaviour of the 'rich'. They disengage from their teams but recover their 'team spirit' under competition. |
| Keywords: | public goods, experiment, team competition, inequality, endowment, within-group |
| JEL: | C72 C91 C92 D31 D63 D72 H41 |
| Date: | 2017–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:17-03&r=cbe |