nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2018‒05‒21
thirteen papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Gender Differences in Risk Tolerance, Trust and Trustworthiness: Are They Related? By Holden , Stein T.; Tilahun , Mesfin
  2. Experimental investigations of coordination games: high success rates, invariant behavior, and surprising dynamics By Jörg Spiller; Friedel Bolle
  3. I might be a liar, but not a thief: An experimental distinction between the moral costs of lying and stealing By Hermann, Daniel; Mußhoff, Oliver
  4. Ambiguity Attitudes in the Loss Domain: Decisions for Self versus Others By Yilong Xu; Xiaogeng Xu; Steven Tucker
  5. Group Trust in Youth Business Groups: Influenced by Risk Tolerance and Expected Trustworthiness By Holden, Stein T.; Tilahun , Mesfin
  6. God Does Not Play Dice, but Do We? By Backhaus, Teresa; Breitmoser, Yves
  7. Can we nudge farmers into saving water? Evidence from a randomized experiment By Sylvain Chabé-Ferret; Philippe Le Coent; Arnaud Reynaud; Julie Subervie; Daniel Lepercq
  8. Measuring Trust in Institutions By Carlsson, Fredrik; Demeke, Eyoual; Martinsson, Peter; Tesemma, Tewodros
  9. Honesty in the Digital Age By Alain Cohn; Tobias Gesche; Michel André Maréchal
  10. Doctor–patient differences in risk and time preferences: a field experiment By Galizzi, Matteo M.; Miraldo, Marisa; Stavropoulou, Charitini; van der Pol, Marjon
  11. Cognitive performance in competitive environments: evidence from a natural experiment By González-Díaz, Julio; Palacios-Huerta, Ignacio
  12. Social Norms, Endogenous Sorting and the Culture of Cooperation By Ernst Fehr; Tony Williams
  13. Norms and Guilt By Anastasia Danilov; Kiryl Khalmetski; Dirk Sliwka

  1. By: Holden , Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun , Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences)
    Abstract: The paper assesses risk tolerance, trust and trustworthiness among male and female youth group members in recently formed primary cooperative businesses in Ethiopia. Male members are found to be more risk tolerant, trusting and trustworthy than females. There is a strong positive correlation between individual risk tolerance and trust for male while this correlation is much weaker for female members. Individual risk tolerance is positively correlated with trustworthiness for males but not for females. Females are more trusting and trustworthy in groups with more risk tolerant members. Females’ trustworthiness is more sensitive to group characteristics and experiences. The findings are consistent with social role theory as males appear more instrumental and females more communal in their responses.
    Keywords: Gender differences; risk tolerance; trust; trustworthiness; youth business group members; social role theory; Ethiopia
    JEL: C93 D80 D81 D84 D90
    Date: 2018–03–19
  2. By: Jörg Spiller (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Friedel Bolle (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))
    Abstract: Binary Threshold Public Good (BTPG) games are central for understanding cooperation and coordination. In the face of their tremendous number of completely different equilibria theoretical predictions about behavior in these games are extremely difficult. In our experiments, four players contribute or not to the production of a public good which is produced if at least k players contribute. The game with k=4 is the Stag Hunt game, k=1 is the Volunteer’s Dilemma. We investigate 16 different games with k=1,2,3,4. The regularities derived from these extensive variations (e.g. invariance concerning positive vs. negative frames and scaling of players; monotonicity concerning k and costs of contribution) can serve as the basis of a behavioral theory for BTPG games and beyond.
    Keywords: Binary Threshold Public Goods, framing, equilibrium selection, payoff dominance, risk dominance, efficiency, experiment
    JEL: C72 D72 H41
    Date: 2017–11
  3. By: Hermann, Daniel; Mußhoff, Oliver
    Abstract: In this paper, we shed light on the different moral costs of dishonesty and stealing. To accomplish this, we set up a die-rolling task which allowed participants to increase their own payout through dishonesty or theft. The results show that participants have fewer reservations about dishonesty compared to stealing, which implies higher intrinsic costs for stealing. We found that gender contributes to this effect, as women distinguish significantly between lying and stealing, while men do not.
    Keywords: Lying,Deception,Stealing,Laboratory Experiment,Behavioral Economics
    JEL: C91 D63 D82
    Date: 2018
  4. By: Yilong Xu (University of Heidelberg); Xiaogeng Xu (Norwegian School of Economics); Steven Tucker (University of Waikato)
    Abstract: Important ?nancial and medical decisions are often made on behalf of others. We study whether and how people’s ambiguity attitudes differ when deciding for others as compared to deciding for oneself in the loss domain. Our results are consistent with the loss part of the fourfold pattern: ambiguity aversion for low likelihood losses and ambiguity neutrality for moderate likelihood losses. This pattern holds both when deciding for oneself and for others. We ?nd no differences in ambiguity attitudes between self- and other-regarding decision-making.
    Keywords: ambiguity attitudes; decision-making for others; losses and uncertainty
    JEL: D81 C91
    Date: 2018–05–14
  5. By: Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun , Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences)
    Abstract: We analyzed lab-in-the-field trust and risk experiment with 1125 youth in 119 youth groups established as primary cooperatives to develop a joint business. The experiments were implemented using classrooms in local schools as field labs. The standard trust game was used with all youth participants playing the roles as trustors as well as trustees. As trustors, they knew that the trustee would be an anonymous member of their own youth group. We hypothesize that this allows trustors to transform uncertainty about trustworthiness into risk such that risk tolerance will influence trusting behavior. The strategy method was used to elicit more detailed information about stated trustworthiness given different amounts received. A proxy measure for risk tolerance was obtained with a separate simple incentivized risk game. Expected trustworthiness in groups was modeled by the first two moments of the average stated and actual within-group trustworthiness. The group level analysis reveals that higher average risk tolerance increases trust and so does expected trustworthiness measured as average stated trustworthiness. Higher expected risk in the trust game, modeled as within-group variability in actual trustworthiness, is associated with lower average trust. More risk tolerant groups are also significantly more trustworthy.
    Keywords: Trust; trustworthiness; risk tolerance; youth groups; primary cooperative; Ethiopia
    JEL: C93 D80 D81 D84 D90
    Date: 2017–10–16
  6. By: Backhaus, Teresa (WZB); Breitmoser, Yves (HU Berlin)
    Abstract: When do we cooperate and why? This question concerns one of the most persistent divides between \"theory and practice\", between predictions from game theory and results from experimental studies. For about 15 years, theoretical analyses predict completely-mixed \"behavior\" strategies, i.e. strategic randomization rendering \"when\" and \"why\" questions largely moot, while experimental analyses seem to consistently identify pure strategies, suggesting long-run interactions are deterministic. Reanalyzing 145,000 decisions from infinitely repeated prisoner\'s dilemma experiments, and using data-mining techniques giving pure strategies the best possible chance, we conclude that subjects play semi-grim behavior strategies similar to those predicted by theory.
    Keywords: repeated game; behavior; tit-for-tat mixed strategy; memory; belief-free equilibrium; laboratory experiment;
    JEL: C72 C73 C92 D12
    Date: 2018–05–11
  7. By: Sylvain Chabé-Ferret; Philippe Le Coent; Arnaud Reynaud; Julie Subervie; Daniel Lepercq
    Abstract: Improving water efficiency is a growing challenge for the Common Agricultural Policy. In this article, we test whether social comparison nudges can promote water-saving behavior among farmers. We report on a pilot Randomized Controlled Trial, in which information on individual and group water consumption were sent every week to farmers equipped with smartmeters. We do not detect an effect of nudges on average water consumption. We however find that the nudge decreases water consumption at the top of the distribution while it increases consumption at the bottom. This study highlights the potential of nudges as an agricultural policy tool.
    Keywords: nudges, behavioral economics, irrigation water use, government policy
    JEL: D90 Q25 Q58
    Date: 2018–05
  8. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Demeke, Eyoual (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Tesemma, Tewodros (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: In empirical studies, survey questions are typically used to measure trust; trust games are also used to measure interpersonal trust. In this paper, we measure trust in different institutions by using both trust games and survey questions. We find that generalized trust is only weakly correlated with trust in specific institutions, when elicited both by using a trust game and by using survey questions. However, the correlation between trust in a specific institution elicited through a trust game and stated trust for the same institution is stronger and statistically significant. Thus, our findings suggest that generalized trust is not an appropriate measure of institutional trust and that more specific institutional trust measures should be used.
    Keywords: experiment; institutional trust; generalized trust
    JEL: C90 D01 D02 O43
    Date: 2018–05
  9. By: Alain Cohn; Tobias Gesche; Michel André Maréchal
    Abstract: Modern communication technologies enable efficient exchange of information, but often sacrifice direct human interaction inherent in more traditional forms of communication. This raises the question of whether the lack of personal interaction induces individuals to exploit informational asymmetries. We conducted two experiments with 866 subjects to examine how human versus machine interaction influences cheating for financial gain. We find that individuals cheat significantly more when they interact with a machine rather than a person, regardless of whether the machine is equipped with human features. When interacting with a human, individuals are particularly reluctant to report unlikely favorable outcomes, which is consistent with social image concerns. The second experiment shows that dishonest individuals prefer to interact with a machine when facing an opportunity to cheat. Our results suggest that human interaction is key to mitigating dishonest behavior and that self-selection into communication channels can be used to screen for dishonest people.
    Keywords: cheating, honesty, private information, communication, digitization, lying costs
    JEL: C99 D82 D83
    Date: 2018
  10. By: Galizzi, Matteo M.; Miraldo, Marisa; Stavropoulou, Charitini; van der Pol, Marjon
    Abstract: We conduct a framed field experiment among patients and doctors to test whether the two groups have similar risk and time preferences. We elicit risk and time preferences using multiple price list tests and their adaptations to the healthcare context. Risk and time preferences are compared in terms of switching points in the tests and the structurally estimated behavioural parameters. We find that doctors and patients significantly differ in their time preferences: doctors discount future outcomes less heavily than patients. We find no evidence that doctors and patients systematically differ in their risk preferences in the healthcare domain.
    Keywords: field experiment; risk aversion; impatience; doctor-patient relationship; structural estimation
    JEL: C93 D91 I11
    Date: 2016–12–01
  11. By: González-Díaz, Julio; Palacios-Huerta, Ignacio
    Abstract: Competitive situations that involve cognitive performance are widespread in labor markets, schools, and organizations, including test taking, competition for promotion in firms, and others. This paper studies cognitive performance in a high-stakes competitive environment. The analysis takes advantage of a natural experiment that randomly allocates different emotional states across professional subjects competing in a cognitive task. The setting is a chess match where two players play an even number of chess games against each other alternating the color of the pieces. White pieces confer an advantage for winning a chess game and who starts the match with these pieces is randomly decided. The theoretical analysis shows that in this setting there is no rational reason why winning frequencies should be better than 50-50 in favor of the player drawing the white pieces in the first game. Yet, we find that observed frequencies are about 60-40. Differences in performance are also stronger when the competing subjects are more similar in cognitive skills. We conclude that the evidence is consistent with the hypothesis that psychological elements affect cognitive performance in the face of experience, competition, and high stakes.
    Keywords: cognitive performance; competition; natural experiments
    JEL: J1
    Date: 2016–07–01
  12. By: Ernst Fehr; Tony Williams
    Abstract: Throughout human history, informal sanctions by peers were ubiquitous and played a key role in the enforcement of social norms and the provision of public goods. However, a considerable body of experimental evidence suggests that informal peer sanctions cause large collateral damage and efficiency costs. This raises the question whether peer sanctioning systems exist that avoid these costs and whether other, more centralized, punishment systems are superior and will be preferred by the people. Here, we show that welfare-enhancing peer sanctioning without much need for costly punishment emerges quickly if we introduce two relevant features of social life into the experiment: (i) subjects can migrate across groups with different sanctioning institutions and (ii) they have the chance to achieve consensus about normatively appropriate behavior. The exogenous removal of the norm consensus opportunity reduces the efficiency of peer punishment and renders centralized sanctioning by an elected judge the dominant institution. However, if given the choice, subjects universally reject peer sanctioning without a norm consensus opportunity – an institution that has hitherto dominated research in this field – in favor of peer sanctioning with a norm consensus opportunity or an equally efficient institution with centralized punishment by an elected judge. Migration opportunities and normative consensus building are key to the quick emergence of an efficient culture of universal cooperation because the more prosocial subjects populate the two efficient institutions first, elect prosocial judges (if institutionally possible), and immediately establish a social norm of high cooperation. This norm appears to guide subjects’ cooperation and punishment choices, including the virtually complete removal of antisocial punishment when judges make the sanctioning decision.
    Keywords: cooperation, punishment ,endogenous institutions, public goods
    JEL: D02 D03 D72 H41
    Date: 2018
  13. By: Anastasia Danilov; Kiryl Khalmetski; Dirk Sliwka
    Abstract: It has been argued that guilt aversion (the aversion to violate others’ expectations) and the compliance to descriptive social norms (the aversion to act differently than others in the same situation) are important drivers of human behavior. We show in a formal model that both motives are empirically indistinguishable when only one benchmark (another person’s expectation or a norm) is revealed as each of these benchmarks signals information on the other one. To address this problem, we experimentally study how individuals react when both benchmarks are revealed simultaneously. We find that both types of information affect transfers in the dictator game. At the same time, the effect of the recipient’s expectation is non-monotonic as dictators use the disclosed expectation in a self-serving way to decrease transfers.
    Keywords: guilt aversion, social norms, conformity, dictator game
    JEL: C91 D83 D84
    Date: 2018

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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