nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2017‒12‒03
seven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. The Big Five Personality Traits and Partisanship in England By Toke Aidt; Christopher Rauh
  2. Can having internal locus of control insure against negative shocks? Psychological evidence from panel data By Buddelmeyer, Hielke; Powdthavee, Nattavudh
  3. If I do not ask for help, it does not mean I do not need it: Experimental analysis of recipients' preferences for redistribution By Serhiy Kandul; Olexandr Nikolaychuk
  4. I deserve more! An experimental analysis of illusory ownership in dictator games By Serhiy Kandul; Olexandr Nikolaychuk
  5. Experimental Social Planners: Good Natured, but Overly Optimistic By Christoph Engel; Svenja Hippel
  6. Reasoning about others’ reasoning By Larbi Alaoui; Antonio Penta
  7. More effort with less pay: On information avoidance, optimistic beliefs, and performance By Huck, Steffen; Szech, Nora; Wenner, Lukas M.

  1. By: Toke Aidt; Christopher Rauh
    Abstract: We propose a new framework for the study of the psychological foundation of party identification. We draw a distinction between the part of an individual’s party preference that is stable throughout adult life and the dynamic part responding to lifecycle events and macro shocks. We theorize that the Big Five personality traits exert a causal effect on the stable part of an individual’s party preference and provide evidence from a large nationally representative English panel dataset in support of this theory. We find that supporters of the major parties (Labour, the Conservatives and the Liberal Democrats) have substantively different personality traits. Moreover, we show that those not identifying with any party, who are close to holding the majority, are similar to those identifying with the Conservatives. We show that these results are robust to controlling for cognitive skills and parental party preferences, and to estimation on a subsample of siblings. The relationship between personality traits and party identification is stable across birth cohorts.
    Keywords: Big Five personality traits, party identification, partisanship, England
    JEL: D79
    Date: 2017
  2. By: Buddelmeyer, Hielke; Powdthavee, Nattavudh
    Abstract: We investigate whether the intensity of emotional pain following a negative shock is different across the distribution of a person's locus of control – the extent to which individuals believe that their actions can influence future outcomes. Using panel data from Australia, we show that individuals with strong internal locus of control are psychologically insured against own and others’ serious illness or injury, close family member detained in jail, becoming a victim of property crime and death of a close friend, but not against the majority of other life events. The buffering effects vary across gender. Our findings thus add to the existing literature on the benefits of internal locus of control.
    Keywords: locus of control; resilience; well-being; happiness; HILDA
    JEL: I19
    Date: 2015–12–24
  3. By: Serhiy Kandul; Olexandr Nikolaychuk
    Abstract: Experimental literature on pro-social behavior has been largely focused on settings where the decision of donors is sufficient for an interaction to occur. However, in many real-life applications recipients first have to ask donors for help to initiate the transaction. We suggest that this first move by the recipients might be associated with psychological costs which include shame of not being able to manage on one's own, negative feelings from the loss of respect, or stigmatization from the society. We argue that the reluctance to initiate the transaction is different from the unwillingness to accept help initiated by somebody else and test this preposition in a laboratory experiment. We let participants play a dictator game with two procedures: (1) dictator first chooses a transfer, and the recipient decides to accept or reject it; (2) recipient first decides to ask or not, and if asked the dictator then chooses a transfer. We also let recipients choose in which of the two conditions they want to play and then compare recipients' and dictators' behavior within each experimental procedure.
    Keywords: dictator game; procedural preferences; fairness; role allocation; social preferences.
    JEL: D01 D64 D90
    Date: 2017–11
  4. By: Serhiy Kandul; Olexandr Nikolaychuk
    Abstract: Delineation of someone's ownership typically involves the sense of deservedness: the property right is respected as long as the owner deserve to own the object. Objectively, deservedness is often linked to one's actions or specific attributes that justify the owner's claims. We argue that people might get the sense of deservedness without an objective causal attribution. In our experiment, the pure luck defines the allocation of the roles. Still, compared to a standard setting, in a treatment where actions have no causal effect on the outcome, dictators keep larger share. At the same time, dictators do not compensate recipients for their irrelevant actions. We interpret this asymmetry in reaction towards the procedures of role allocation as 'illusory property': people care about irrelevant procedures only if they favor themselves but not others.
    Keywords: dictator game; entitlement; fairness; social preferences; procedural preferences.
    JEL: D01 D64 D90
    Date: 2017–11
  5. By: Christoph Engel (Max Planck Institute for Research on Collective Goods); Svenja Hippel (Max Planck Institute for Research on Collective Goods)
    Abstract: Public goods are dealt with in two literatures that neglect each other. Mechanism design advises a social planner that expects individuals to misrepresent their valuations. Experiments study the provision of the good when preferences might be non-standard. We introduce the problem of the mechanism design literature into a public good experiment. Valuations for the good are heterogeneous. To each group we add a participant with power to impose a contribution scheme. We study four settings: the authority has no personal interest and (1) valuations are common knowledge or (2) active participants may misrepresent their types; the authority has a personal interest (3) and must decide before learning her own valuation or (4) knows her own valuation. Disinterested social planners predominantly choose a payment rule that gives every group member the same ?nal payoff, even if misrepresentation is possible. Authorities are overly optimistic about truth telling. Interested social planners abuse their power, except if the opportunity cost of a more balanced rule is small.
    Keywords: Public Good, Social Planner, Truthtelling, Experiment
    JEL: C91 D02 D03 D61 D62 D64 H23 K12
    Date: 2017–11
  6. By: Larbi Alaoui; Antonio Penta
    Abstract: Recent experiments suggest that level-k behavior is often driven by subjects' beliefs, rather than their binding cognitive bounds. But the extent to which this is true in general is not completely understood, mainly because disentangling 'cognitive' and 'behavioral' levels is challenging experimentally and theoretically. In this paper we provide a simple experimental design strategy (the 'tutorial method') to disentangle the two concepts purely based on subjects' choices. We also provide a 'replacement method' to assess whether the increased sophistication observed when stakes are higher is due to an increase in subjects' own understanding or their beliefs over others' increased incentives to reason. We find evidence that, in some of our treatments, the cognitive bound is indeed binding for a large fraction of subjects. Furthermore, a significant fraction of subjects do take into account others' incentives to reason. Our findings also suggest that in general, level-k behavior should not be taken as driven either by cognitive limits alone or beliefs alone. Rather, there is an interaction between own cognitive bound and reasoning about the opponent's reasoning process. From a methodological viewpoint, the tutorial and replacement methods have broader applicability, and can be used to study the beliefs-cognition dichotomy and higher order beliefs e ects in non level-k settings as well.
    Keywords: cognitive bound, depth of reasoning, higher-order beliefs. level-k reasoning, replacement method, tutorial method
    JEL: C72 C92 D80
    Date: 2017–11
  7. By: Huck, Steffen; Szech, Nora; Wenner, Lukas M.
    Abstract: Recent behavioral models argue in favor of avoidance of instrumental information. We explore the role of information avoidance in a real-effort setting. Our experiment offers three main results. First, we confirm that preferences for avoidance of instrumental information exist, studying information structures on performance pay. Second, information avoiders outperform information receivers. This result holds independently of effects of self-selection. Third, the findings support theories on information avoidance that favor an optimistic belief design rather than theories that rationalize such behavior as a way to mitigate selfcontrol problems. This suggests that coarse information structures lead agents to distort their beliefs away from the objective prior.
    Keywords: optimal expectations,belief design,performance,real effort task,coarse incentive structures,workplace incentives
    JEL: D83 D84 J31 M52
    Date: 2017

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