nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2018‒04‒16
nine papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Experimentally Induced Empathy does not Affect Monetarily Incentivized Dictator Game Behavior By Lönnqvist, Jan-Erik; Walkowitz, Gari
  2. Observational and reinforcement pattern-learning: An exploratory study * By Nobuyuki Hanaki; Alan Kirman; Paul Pezanis-Christou
  3. Sales impact of servicescape’s emotional and rational stimuli: a survey study By Morone, Andrea; Nemore, Francesco; Schirone, Dario Antonio
  4. Sales impact of servicescape’s rational stimuli: a natural field experiment By Morone, Andrea; Nemore, Francesco; Schirone, Dario Antonio
  5. Friends or Strangers? Strategic Uncertainty and Coordination across Experimental Games of Strategic Complements and Substitutes By Gabriele Chierchia; Fabio Tufano; Giorgio Coricelli
  6. Ethics, algorithms and self-driving cars – a CSI of the ‘trolley problem’ By Renda, Andrea
  7. Self Confidence Spillovers and Motivated Beliefs By Ritwik Banerjee; Nabanita Datta Gupta; Marie Claire Villeval
  8. Giving in the face of risk By Cettolin, Elena; Riedl, Arno; Tran, Giang
  9. How laboratory experiments could help disentangle the influences of production risk and risk preferences on input decisions By Bougherara, Douadia; Nauges, Céline

  1. By: Lönnqvist, Jan-Erik; Walkowitz, Gari
    Abstract: In a monetarily incentivized Dictator Game we expected Dictators’ empathy towards the Recipients to cause more pro-social allocations. Empathy was experimentally induced via a commonly used perspective taking task. Dictators (N = 476) were instructed to split an endowment of 10€ between themselves and an unknown Recipient. They could split the money 8/2 (8€ for Dictator, 2€ for Recipient) or 5/5 (5€ each). Although the empathy manipulation successfully increased Dictators’ feelings of empathy towards the Recipients, Dictators’ decisions on how to split the money were not affected. We had ample statistical power (above .99) to detect a typical social psychology effect (corresponding to r around .20). Other possible determinants of generosity in the Dictator Game should be investigated.
    Keywords: Empathy, Dictator Game, Generosity, Altruism, Experimental Economics
    JEL: C72 C91 D03
    Date: 2018–03–13
  2. By: Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS - Centre National de la Recherche Scientifique - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - UCA - Université Côte d'Azur); Alan Kirman (National Centre of Scientific Research (CAMS-CERMESCNRS- EHESS), Paris, France); Paul Pezanis-Christou (BETA - Bureau d'Economie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique, University of Adelaide)
    Abstract: Understanding how individuals learn in an unknown environment is an important problem in economics. We model and examine experimentally behavior in a very simple multi-armed bandit framework in which participants do not know the inter-temporal payoff structure. We propose a baseline reinforcement learning model that allows for pattern-recognition and change in the strategy space. We also analyse three augmented versions that accommodate observational learning from the actions and/or payoffs of another player. The models successfully reproduce the distributional properties of observed discovery times and total payoffs. Our study further shows that when one of the pair discovers the hidden pattern, observing another's actions and/or payoffs improves discovery time compared to the baseline case.
    Keywords: multi-armed bandit,reinforcement learning,payoff patterns,observational learning
    Date: 2018–05
  3. By: Morone, Andrea; Nemore, Francesco; Schirone, Dario Antonio
    Abstract: Environmental psychologists suggest that people feelings and emotions determine what they do and how they do it. According to the stimulus organism respons model (SOR), the environment creates a behavioral/emotional response in individuals that, in turn, induces approach or avoidance behaviors. We conducted survey in six stores, settled in six different Italian cities, of a Swedish-founded Dutch-based multinational group, that designs and sells ready-to-assemble furniture, kitchen appliances and home accessories. Firstly, we apply the SOR model to evaluate loyalty program participation impact on consumers receipts. Subsequently, we provide empirical evidence about the effects of an emotional-sensorial stimulus (i.e. the presence of the restaurant inside the store). Through both a non-parametric and parametric testing, we found that environmental stimuli have a positive effect in terms of sales.
    Keywords: Servicescape; sensorial stimuli; functionality; loyalty; restaurant.
    JEL: C9 D2
    Date: 2018–01–01
  4. By: Morone, Andrea; Nemore, Francesco; Schirone, Dario Antonio
    Abstract: Environmental psychologists suggest that people feelings and emotions determine what they do and how they do it. We used the stimulus organism respons model (SOR) as an inspiring theoretical basis for our empirical contribution. We conducted a natural field experiment in six stores, settled in six different Italian cities, of a Swedish-founded Dutch-based multinational group, that designs and sells ready-to-assemble furniture, kitchen appliances and home accessories. We provided empirical evidence about the effects of a rational-functional stimulus, i.e. the availability of a new tool for collecting items that is more comfortable and less cumbersome for consumers. Through both a non-parametric and parametric testing, we found a positive effect of the stimuli in terms of sales.
    Keywords: Servicescape; sensorial stimuli; functionality; shopping tool.
    JEL: C9 D2
    Date: 2018–01–01
  5. By: Gabriele Chierchia (Center for Mind/Brain Science, University of Trento, and Max Planck Institute for Human Cognitive and Brain Sciences); Fabio Tufano (School of Economics, University of Nottingham); Giorgio Coricelli (Center for Mind/Brain Science, University of Trento, and Department of Economics, University of Southern California)
    Abstract: It is commonly assumed that friendship should generally benefit agents’ ability to tacitly coordinate with others. However, this has never been tested on two “opposite poles†of coordination, namely, games of strategic complements and substitutes. We present an experimental study in which participants interact with either a friend or a stranger in two classic games: the stag hunt game, which exhibits strategic complementarity, and the entry game, which exhibits strategic substitutability. Both games capture a frequent trade-off between a potentially high paying but uncertain action and a lower paying but safe alternative. We find that, relative to strangers, friends exhibit a propensity towards uncertainty in the stag hunt game, but an aversion to uncertainty in the entry game. Friends also “tremble†less than strangers, coordinate better and earn more in the stag hunt game but these advantages are largely decreased, and almost entirely lost in the entry game. Friendship thus appears to have a very different impact on coordination games involving strategic complements and substitutes. We further investigate the role of interpersonal similarities and friendship qualities in this differential impact.
    Keywords: coordination; entry game; friendship; strategic complementarity; strategic substitutability; stag hunt game; strategic uncertainty
    Date: 2018–01
  6. By: Renda, Andrea
    Abstract: Many experts argue that focusing on how automated cars will solve the dilemma known as the ‘trolley problem’ isn’t going to get us very far in the debate about the ethics of artificial intelligence (AI). But it’s hard to resist if you are a philosopher, an ethicist, a futurist, or simply a geek – and it’s fun. Still, this dilemma can reveal a number of outstanding policy issues that are often neglected in the public debate. This paper performs a ‘crime scene investigation’ to find some of the missing parts in the ethics/AI quandary. These include the need to preserve human control over machines; the need to take data governance and ownership seriously; algorithmic accountability and transparency; various forms of user empowerment and their tension in relation to overall system control; the need for modernised tort rules; and more generally, a discussion about whether algorithms should reflect, exacerbate or mitigate the biases existing in our society. The investigation concludes that current legal systems are insufficiently equipped to cope with most of these issues, and that a mapping of outstanding ethical and policy dilemmas is a useful starting point for a thorough overhaul of public policies in this complex and ever-expanding domain.
    Date: 2018–01
  7. By: Ritwik Banerjee (Indian Institute of Management Bangalore, Bannerghatta Main Road, Sundar Ram Shetty Nagar, Bilekahalli, Bengaluru, Karnataka 560076 India); Nabanita Datta Gupta (Department of Economics and Business Economics, Aarhus University, Denmark, and IZA, Bonn. Fuglesangs Allé 4, 8210 Aarhus V, Denmark); Marie Claire Villeval (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69131 Ecully, France; IZA, Bonn, Germany)
    Abstract: Is success in a task used strategically by individuals to motivate their beliefs prior to taking action in a subsequent, unrelated, task? Also, is the distortion of beliefs reinforced for individuals who have lower status in society? Conducting an artefactual field experiment in India, we show that success when competing in a task increases the performers’ self-confidence and competitiveness in the subsequent task. We also find that such spillovers affect the self-confidence of low-status individuals more than that of high-status individuals. Receiving good news under Affirmative Action, however, boosts confidence across tasks regardless of the caste status.
    Keywords: Motivated beliefs, spillovers, self-confidence, competitiveness, Affirmative Action, experiment
    JEL: C91 J15 M52
    Date: 2018
  8. By: Cettolin, Elena (Tilburg University, School of Economics and Management); Riedl, Arno; Tran, Giang
    Abstract: Decisions about how to share resources with others often need to be taken under uncertainty regarding its allocational consequences. Although risk preferences are likely important, existing research is silent about how social and risk preferences interact in such situations. In this paper we provide experimental evidence on this question. In a first experiment givers are not exposed to risk while beneficiaries’ final earnings may be larger or smaller than the allocation itself, depending on the realized state of the world. In a second experiment, risk affects the earnings of givers but not of beneficiaries. We find that individuals’ risk preferences are predictive for giving in both experiments. Increased risk exposure of beneficiaries tends to decrease giving whereas increased risk exposure of givers has no effect. We propose a simple non-linear generalization of a model allowing for other-regarding preferences, ex-post and ex-ante fairness, and risk aversion. We find some support for it in our data when risk is on the beneficiaries’ side but less so when risk is on the givers’ side. Our results point to the importance of the further development of models of social preferences that also incorporate risk preferences.
    Date: 2017
  9. By: Bougherara, Douadia; Nauges, Céline
    Abstract: The purpose of this article is to further our understanding of input choices (such as pesticides or fertilisers) when producers face production risk that depends on a random shock and on the quantity of input used. Using laboratory experiments, we study the role of risk preferences and public policies (here, a lump-sum subsidy and insurance) on producers’ input decisions in two situations: i) a risk-decreasing input; and ii) a risk-increasing input. Our findings raise questions on the sensitivity of optimal input choices to risk preferences and the relevance of the expected utility model to describe farmers’ decisions.
    Keywords: laboratory experiment; input choice; production risk; risk preferences; subsidy; insurance
    Date: 2018–03

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