nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2018‒03‒19
eight papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Economic philosophy of al-Mawardi: Review of economic behaviour in Islamic economic By Jaelani, Aan
  2. On the Relationship Between Cognitive Ability and Risk Preference By Dohmen, Thomas; Falk, Armin; Huffman, David; Sunde, Uwe
  3. Ordering Ambiguous Acts By Sujoy Mukerji; Ian Jewitt
  4. Evaluating intergenerational persistence of economic preferences: A large scale experiment with families in Bangladesh By Chowdhury, Shyamal; Sutter, Matthias; Zimmermann, Klaus F.
  5. Physical Distance and Cooperativeness Towards Strangers By Leonie Kühl; Nora Szech
  6. Cheating for my or for your benefit? A field experiment with children By Julia Kramer; Silvia Lübbecke; Nina Lucia Stephan
  7. Don't patronize me! An Experiment on Rejecting Paternalistic Help By Silvia Lübbecke; Wendelin Schnedler
  8. When Supervisors Start to Meddle: An Experiment on the Determinants of Intervention By Silvia Lübbecke; Wendelin Schnedler

  1. By: Jaelani, Aan
    Abstract: Economic behaviour in the study of Islamic economics is the basis for the government to portray political ethics and ethical economic functions of individuals in functioning as a member of society. Secular ethics and religious ethics, according to al-Mawardi, as the code of conduct in conducting economic practices by the government and every member of society to uphold the principle of goodness. In the context of economic behaviour, the world ethics (adab al-dunya) and the religious ethics (adab al-din) became guidelines for economic actors in conducting business activities including other forms of cooperation or other muamalah practice.
    Keywords: Philosophy of economics, behavioral economics, ethics, religion, Islamic Economic
    JEL: B31 B41 D01 D1 D6 H1 H5 N01 N25 N3 N35
    Date: 2017–11–10
  2. By: Dohmen, Thomas (University of Bonn and IZA); Falk, Armin (briq and University of Bonn); Huffman, David (University of Pittsburgh); Sunde, Uwe (LMU)
    Abstract: This paper focuses on the relationship between cognitive ability and decision making under risk and uncertainty. We begin by clarifying some important distinctions between concepts and measurement of risk preference and cognitive ability and then take stock of what is known empirically on the connections between cognitive ability and measured risk preferences.
    Keywords: ;
    Date: 2018–03–05
  3. By: Sujoy Mukerji (Queen Mary University of London); Ian Jewitt (Nuffield College, Oxford University)
    Abstract: We investigate what it means for one act to be more ambiguous than another. The question is evidently analogous to asking what makes one prospect riskier than another, but beliefs are neither objective nor representable by a unique probability. Our starting point is an abstract class of preferences constructed to be (strictly) partially ordered by a more ambiguity averse relation. First, we define two notions of more ambiguous with respect to such a class. A more ambiguous (I) act makes an ambiguity averse decision maker (DM) worse off but does not affect the welfare of an ambiguity neutral DM. A more ambiguous (II) act adversely affects a more ambiguity averse DM more, as measured by the compensation they require to switch acts. Unlike more ambiguous (I), more ambiguous (II) does not require indifference of ambiguity neutral elements to the acts being compared. Second, we implement the abstract definitions to characterize more ambiguous (I) and (II) for two explicit preference families: a maxmin expected utility and smooth ambiguity. Thirdly, we give applications to the comparative statics of more ambiguous in a standard portfolio problem and a consumption-saving problem.
    Keywords: Ambiguity, Uncertainty, Knightian Uncertainty, Ambiguity Aversion, Uncertainty aversion, Ellsberg paradox, Comparative statics, Single-crossing, More ambiguous, Portfolio choice
    JEL: C44 D80 D81 G11
    Date: 2017–07–20
  4. By: Chowdhury, Shyamal (University of Sydney, and IZA Bonn); Sutter, Matthias (Max Planck Institute for Research on Collective Goods Bonn, and University of Cologne); Zimmermann, Klaus F. (UNU-MERIT)
    Abstract: Economic preferences - like time, risk and social preferences - have been shown to be very influential for real-life outcomes, such as educational achievements, labour market outcomes, or health status. We contribute to the recent literature that has examined how and when economic preferences are formed, putting particular emphasis on the role of intergenerational transmission of economic preferences within families. Our paper is the first to run incentivized experiments with fathers and mothers and their children by drawing on a unique dataset of 1,999 members of Bangladeshi families, including 911 children, aged 6-17 years, and 544 pairs of mothers and fathers. We find a large degree of intergenerational persistence as the economic preferences of mothers and fathers are significantly positively related to their children's economic preferences. Importantly, we find that socio-economic status of a family has no explanatory power as soon as we control for parents' economic preferences. A series of robustness checks deals with the role of older siblings, the similarity of parental preferences, and the average preferences within a child's village.
    Keywords: Intergenerational transmission of preferences, time preferences, risk preferences, social preferences, children, parents, Bangladesh, socio-economic status, experiment
    JEL: C90 D90 D81 D64 J13 J24 J62
    Date: 2018–02–19
  5. By: Leonie Kühl; Nora Szech
    Abstract: Cooperativeness among genetically unrelated humans remains a major puzzle in the social sciences. We explore the causal impact of physical distance on willingness to help. In a field setting, participants decide about supporting local refugees at the dispense of money to themselves. We vary physical distance only, and keep other factors such as cultural distance fixed. The data shows that an increase in local physical distance decreases willingness to donate. A laboratory experiment confirms this finding. We further explore the causal roles of exposure (in the field) and of larger distances (in the lab) with a total of 475 participants.
    Keywords: cooperativeness, physical distance, strangers, morally relevant behavior, local neighborhoods
    JEL: C91 C93 D64
    Date: 2017
  6. By: Julia Kramer (University of Paderborn); Silvia Lübbecke (University of Paderborn); Nina Lucia Stephan (University of Paderborn)
    Abstract: ”The end justifies the means.” Experimental literature has proven that subjects cheat when costs from being detected are zero and the reward sufficiently positive. People cheat if this generates an increased payoff to them, while they have little reason to cheat if thereby they can only reward someone else. While recently, some studies investigate altruistic cheating behavior of adults, little interest has been granted to children. In this paper, we run a field experiment with children to find out whether the cheating behavior is something that lies in human nature and is thus already present in young children. This would speak against theories claiming that social behavior is only developed over time, as people grow up. Our data show that children are more likely to cheat if the cheating benefits themselves instead of someone else. We find a significant difference of 16 percentage points in cheating behavior depending on who would benefit from cheating. However, many children do not seem to cheat at all, and cheating behavior also differs between genders and different age groups. Surprisingly, whether the child can benefit a friend through cheating, rather than a stranger, does only make a marginally significant difference.
    Keywords: cheating, dishonesty, altruism, children, field experiment (keywords)
    JEL: C93 D63 D64 Z13
    Date: 2018–02
  7. By: Silvia Lübbecke (University of Paderborn); Wendelin Schnedler (University of Paderborn)
    Abstract: Children sometimes reject help that they have not asked for only to do the work themselves. Here, we study whether adults also reject such paternalistic help and distinguish between three possible reasons. The person rejecting help may want to preserve her self-esteem, signal her autonomy or signal her cognitive competence to the interfering party (paternalist). By varying the information available to the paternalist, we can isolate these three effects. If all three effects can operate, a substantial fraction rejects paternalistic help. Excluding the opportunity to signal cognitive competence or autonomy to the paternalist through rejection leads to a sizable (but not statistically significant) reduction of rejections.
    Keywords: self-esteem, image concerns, autonomy, cognitive competence, paternalism, self-determination
    JEL: C91 D82 D91
    Date: 2018–02
  8. By: Silvia Lübbecke (University of Paderborn); Wendelin Schnedler (University of Paderborn)
    Abstract: In large companies, supervisors are hired to control their subordinates’ performance and intervene with risky decisions in order to increase productivity. However, their decision to intervene may not always be profit-orientated. This paper studies whether the decision to intervene in a worker’s decision is influenced by psychological factors that are unrelated to the profitability of intervention. In particular, we examine the role of incidental moods and the anticipation of regret triggered by ex-post evaluation of the decision. Intervention behavior is analyzed in a factorial design controlling for two mood conditions (positive, negative) and the presence or absence of feedback on either the efficiency of intervention or on its social (dis)approval by the supervised worker. We observe that supervisors in the negative mood condition intervene less often (approx. 13%) than those in the positive mood condition. Further, when supervisors are later evaluated, they intervene less (approx. 16%). Our observations are consistent with the idea that supervisors’ decision are not only driven by payoff but also by incidental moods and regret anticipation. The effects, however, are not statistically significant.
    Keywords: intervention, incidental affects, anticipation of regret, decision under uncertainty, group decision-making
    JEL: C91 D81 D82 D83 D91
    Date: 2018–02

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