nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2018‒01‒01
thirteen papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Tat will tell: Tattoos and time preferences By Bradley Ruffle, Anne Wilson
  2. Public goods, role models and "sucker aversion": the audience matters By Attanasi, Giuseppe Marco; Dessi, Roberta; Moisan, Frédéric; Robertson, Donald
  3. Biased by success and failure: How unemployment shapes stated locus of control By Preuss, Malte; Hennecke, Juliane
  4. Using Behavioral Economics to Curb Workplace Misbehaviors: Evidence from a Natural Field Experiment By Jeffrey Flory; Andreas Leibbrandt; John List
  5. Nudging the electorate: what works and why? By Felix Koelle; Tom Lane; Daniele Nosenzo; Chris Starmer
  6. Bounded rationality in differential games By Beckmann, Klaus B.
  7. Diffusion of being pivotal and immoral outcomes By Falk, Armin; Szech, Nora
  8. When You Know Your Neighbour Pays Taxes: Information, Peer Effects, and Tax Compliance By Alm, James; Bloomquist, Kim M.; McKee, Michael
  9. Crowdfunding public goods: An experiment By Erik Ansink; Mark Koetse; Jetske Bouma; Dominic Hauck; Daan van Soest
  10. Risk taking for others: an experiment on ethics meetings By Francesco Feri, Caterina Giannetti, Pietro Guarnieri
  11. The Impact of Price Information on Consumer Behavior: An Experiment By Francisco B. Galarza; Gabriella Wong
  12. Coordination via redistribution By Andrea Martinangeli; Peter Martinsson; Amrish Patel
  13. Correlation neglect and case-based decisions By Benjamin Radoc; Robert Sugden; Theodore L. Turocy

  1. By: Bradley Ruffle, Anne Wilson (Wilfrid Laurier University)
    Abstract: Forty percent of Americans under the age of 40 have at least one tattoo. Yet survey and experimental evidence suggests that the tattooed are viewed negatively and may face discrimination in the labor market and in commercial transactions. In view of the potentially adverse economic consequences of a tattoo, the decision to get one may be regarded as shortsighted and impulsive. We collect numerous measures of time preferences and impulsivity of tattooed and non-tattooed subjects and find broad-ranging and robust evidence that those with tattoos, especially visible ones, are more short-sighted and impulsive than the non-tattooed. Almost nothing mitigates these results, neither the motive for the tattoo, nor the time contemplated before getting tattooed, nor the time elapsed since the most recent tattoo. Even the expressed intention to get a(nother) tattoo predicts increased short-sightedness and helps to pin down the direction of causality between tattoos and short-sightedness.
    Keywords: experimental economics, tattoo, time preferences, impulsivity
    JEL: C91 Z10
    Date: 2017–12–01
  2. By: Attanasi, Giuseppe Marco; Dessi, Roberta; Moisan, Frédéric; Robertson, Donald
    Abstract: Intergenerational interactions play an important part in society with older generations often acting as role models that in uence younger ones. We investigate in a public good experiment how the behavior of more experienced and knowledgeable players (graduate students) is affected when they are informed that some of their personal and behavioral characteristics will be transmitted to future first-year undergraduates (enrolling the following year) playing the same game at the same university. In the "information" treatment, the history of behavior is transmitted with some personal characteristics (e.g. age and gender). In the \photo" treatment, a photo is also transmitted. Despite the absence of any monetary linkage between generations, our results show a significant effect of visibility by the future audience on initial contributions and dynamic behavior. Contrary to previous findings in the literature, contributions are lower in the presence of such personal identification. We explain this surprising negative effect by a "sucker aversion" bias according to which people become more sensitive to being perceived as exploited by their peers. We argue that the nature of the "audience" matters in reaching such an undesirable outcome.
    Keywords: Intergenerational transmission; role models; identity; audience
    JEL: C91 C92 H41
    Date: 2017–11
  3. By: Preuss, Malte; Hennecke, Juliane
    Abstract: Due to its extraordinary explanatory power for individual behavior, the interest in the concept of locus of control (LOC) has increased substantially within applied economic research. But, even though LOC has been found to affect economic behavior in many ways, the reliability of these findings is at risk as they commonly rely on the assumption that LOC is stable over the life course. While absolute stability has been generally rejected, the extent to which LOC and thus personality changes is, nonetheless, strongly debated. We contribute to this discussion by analyzing the effect of unemployment on LOC. Based on German panel data, we apply a difference-in-difference approach by using an involuntary job loss as trigger for unemployment. Overall, we find a significant shift in stated LOC due to unemployment. Because the effect is observable during unemployment only and not heterogeneous with respect to individual characteristics or unemployment duration, we conclude that only the stated LOC is biased during unemployment but the underlying personality trait itself is not affected.
    Keywords: personality,locus of control,unemployment,measurement error
    JEL: C83 J24 J64 J65
    Date: 2017
  4. By: Jeffrey Flory; Andreas Leibbrandt; John List
    Abstract: Workplace misbehaviors are often governed by explicit monitoring and strict punishment. Such enforcement activities can serve to lessen worker productivity and harm worker morale. We take a different approach to curbing worker misbehaviour - bonuses. Examining more than 6500 donor phone calls across more than 80 workers, we use a natural field experiment to investigate how different wage contracts influence workers' propensity to break workplace rules in harmful ways. Our findings show that even though standard relative performance pay contracts, relative to a fixed wage scheme, increase productivity, they have a dark side: they cause considerable cheating and sabotage of co-workers. Yet, even in such environments, by including an unexpected bonus, the employer can substantially curb worker misbehavior. In this manner, our findings reveal how employers can effectively leverage bonuses to eliminate undesired behaviors induced by performance pay contracts.
    Date: 2017
  5. By: Felix Koelle (Department of Economics, University of Cologne); Tom Lane (Department of Economics, University of Nottingham); Daniele Nosenzo (School of Economics, University of Nottingham); Chris Starmer (School of Economics, University of Nottingham)
    Abstract: We report two studies investigating whether, and if so how, different interventions affect voter registration rates. In a natural field experiment conducted before the 2015 UK General Election, we varied messages on a postcard sent by Oxford City Council to unregistered student voters encouraging them to register to vote. Relative to a baseline, emphasising negative monetary incentives (the possibility of being fined) significantly increased registration rates, while positive monetary incentives (chances of winning a lottery) had no significant effects. In the second study, we show that the success of the negative monetary incentive intervention and failure of the positive monetary incentive intervention can be partly explained by social norms.
    Keywords: Voter Registration; Voting; Field Experiment; Nudging; Social Norms; Fines; Rewards
    Date: 2017
  6. By: Beckmann, Klaus B. (Helmut Schmidt University, Hamburg)
    Abstract: The present paper proposes a myopic, boundedly rational heuristic for individual decision-making in differential game settings. I demonstrate that this type of behaviour converges to Nash equilibrium in infinitely repeated stage games without a state variable if the stage game is strategically symmetric. Two examples are used to illustrate the application of the heuristic in differential games.
    Keywords: differential games; simulation; bounded rationality
    JEL: C72
    Date: 2017–12–19
  7. By: Falk, Armin; Szech, Nora
    Abstract: We study how the diffusion of being pivotal affects immoral outcomes. In a first set of experiments, subjects decide about agreeing to kill mice and receiving money versus objecting to kill mice and foregoing the monetary amount. In a baseline condition, subjects decide individually about the life of one mouse. In the main treatment, subjects are organized into groups of eight and decide simultaneously. Eight mice are killed if at least one subject supports the killing. The fraction of subjects agreeing to kill is significantly higher in the main condition compared to the baseline condition. In the second set of experiments, we run the same baseline and main conditions but use a charity context and additionally study sequential decisions. We replicate our main finding from the mouse paradigm and additionally show that in the sequential treatment, prosocial behavior is even less pronounced. We further show that the observed effects increase with experience, i.e., when we repeat the experiment for a second time. Finally, we report evidence on beliefs, elicited in our main experiments but also from a treatment of noninvolved observers, and show that beliefs about being pivotal are a main driver of our results.
    Keywords: committees,diffusion of being pivotal,group decisions,morality,replacement logic
    JEL: C91 D01 D03 D23 D63
    Date: 2017
  8. By: Alm, James; Bloomquist, Kim M.; McKee, Michael
    Abstract: In this paper, we suggest that individuals’ tax compliance behaviours are affected by the behaviour of their “neighbours†, or those about whom they may have information, whom they may know, or with whom they may interact on a regular basis. Individuals are more likely to file and to report their taxes when they believe that other individuals are also filing and reporting their taxes; conversely, when individuals believe that others are cheating on their taxes, they may well become cheaters themselves. We use experimental methods to test the role of such information about peer effects on compliance behaviour. In one treatment setting, we inform individuals about the frequency that their neighbours submit a tax return. In a second treatment setting, we inform them about the number of their neighbours who are audited, together with the penalties that they pay. In both cases, we examine the impact of information on filing behaviour and also on subsequent reporting behaviour. We find that providing information on whether one’s neighbours are filing returns and/or reporting income has a statistically significant and economically large impact on individual filing and reporting decisions. However, this “neighbour†information does not always improve compliance, depending on the exact content of the information.
    Keywords: Tax evasion, Tax compliance, Behavioural economics, Experimental economics,
    Date: 2017
  9. By: Erik Ansink (Tinbergen Institute, Vrije Universiteit Amsterdam); Mark Koetse (Institute for Environmental Studies, Vrije Universiteit Amsterdam); Jetske Bouma (Netherlands Environmental Assessment Agency (PBL) and Institute for Environmental Studies, Vrije Universiteit Amsterdam); Dominic Hauck (Institute for Environmental Studies, Vrije Universiteit Amsterdam); Daan van Soest (Department of Economics and CentER, Tilburg University)
    Abstract: We assess the impact of different crowdfunding designs on the success of crowdfunded public goods using a lab-in-the-field experiment. Our design treatments aim to increase the efficiency of crowdfunding campaigns by raising aggregate contributions and decreasing possible coordination problems that may occur when potential donors are faced with a multitude of projects seeking contributions. Amongst others, we explore the potential of seed money and the impact of the attraction effect. Using a four-day time window we implement our crowdfunding experiment using a web-based user interface with multiple threshold public goods, similar in style to conventional crowdfunding websites. We find that such alternative crowdfunding designs affect efficiency via improving coordination, and not so much via affecting total contributions. These results are confirmed in a follow-up framed field experiment with actual nature conservation projects.
    Keywords: Crowdfunding; lab-in-the-field experiment; threshold public goods; charitable giving; nature conservation
    JEL: C93 H41 L31 Q57
    Date: 2017–12–15
  10. By: Francesco Feri, Caterina Giannetti, Pietro Guarnieri
    Abstract: Relying on an novel experimental design, we study the effect of, so called, ethics meetings on risktaking for others decisions in a situation where preferences of a decision maker are not aligned with those of a passive receiver. Decision makers choose between two risky gambles, one of which always implies a better outcome for himself but exposes the receiver to higher risk. In the main treatments (i.e. Ethics meeting), in contrast to the Baseline treatment, decision makers also discuss within a group of peers – before their decision – the consequences of their choice. Our results show that, in treatments with ethics meetings, decision makers tend to choose more often the less risky gamble for the receiver.
    Keywords: discussion, moral psychology, ethics
    JEL: G02 G32 C91 D81
    Date: 2017–01–01
  11. By: Francisco B. Galarza (Universidad del Pacifico); Gabriella Wong (Innovations for Poverty Action)
    Abstract: We conduct blind tests to examine the connection between consumer’s choices and price differentials, for two goods with different levels of observable quality, bottled spring water and toilet paper (we pose that toilet paper’s quality is more easily observable). We gave subjects two samples of those goods, with no labels for their brands, but with two different prices. Given that the samples were exactly the same, we aimed at testing whether the price differentials influenced their perceptions of quality, for a given level of quality observability. The most striking result is that quality information inferred via price differentials have significant effects on consumer choices, when such difference is relatively high and quality is not easy to observe. Moreover, in such a case, prices shape the perceptions of quality: "If it is expensive, it tastes good". In contrast, when quality is easy to observe, we find no significant relationship between price differentials and perceived quality.
    Keywords: Price-quality, Experimental Economics, behavioral pricing, placebo effect, consumer decision-making
    JEL: C91 D03 D81 D89
    Date: 2017–12
  12. By: Andrea Martinangeli (Max Planck Institute for Tax and Public Finance); Peter Martinsson (University of Gothenburg); Amrish Patel (University of East Anglia)
    Abstract: Can prior voluntary redistribution improve coordination? We theoretically show that distributive preferences, forward induction and signalling all imply that it can. We then experimentally test our predictions by allowing subjects to redistribute part of their endowment before playing a battle of the sexes game. To identify whether the redistribution option increases coordination, and why, we also run experiments with no redistribution and forced redistribution. Our results show that the redis- tribution option does indeed significantly increase coordination. Disentangling the reasons why, we find that behaviour is most consistent with distributive preferences and one-step of forward induction (rather than signalling or two-steps of forward induction).
    Keywords: coordination, redistribution, experiment, distributive preferences, forward induction, signalling altruism
    JEL: C72 D02
    Date: 2017–11–22
  13. By: Benjamin Radoc (Ateneo de Manila University); Robert Sugden (University of East Anglia); Theodore L. Turocy (University of East Anglia)
    Abstract: We test the conjecture that case-based reasoning may be used, not only when state spaces are undefined, but also when relevant probabilities can be derived by Bayesian inference from observations of random processes. Our experiment elicits participants' valuations of a lottery after observing realisations of this and another lottery. Depending on the treatment, participants know that the two lotteries are independent, positively correlated, or negatively correlated. We find no evidence of correlation neglect indicative of case-based reasoning. However, in the negative correlation treatment, valuations cannot be explained by Bayesian reasoning, while stated qualitative judgements about chances of winning can.
    Keywords: case-based decision, correlation, experiment
    JEL: C91 D03 D81
    Date: 2017–11–27

This nep-cbe issue is ©2018 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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