nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2018‒06‒11
eleven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Public Goods Games and Psychological Utility: Theory and Evidence By Sanjit Dhami; Mengxing Wei; Ali al-Nowaihi
  2. Mine, Ours or Yours? Unintended Framing Effects in Dictator Games By Andreas Bergh; Philipp Christoph Wichardt
  3. Spillovers, Persistence and Learning: Institutions and the Dynamics of Cooperation By Emeric Henry; Nicolas Jacquemet; Roberto Galbiati
  4. Time preferences between individuals and groups in the transition from hunter-gatherer to industrial societiesm By Yayan Hernuryadin; Koji Kotani; Yoshio Kamijo
  5. "A Cognitive Foundation for Social Image Concerns" By Yosuke Hashidate
  6. Time preferences of older people with mild cognitive impairment By Y. Bayer, B.J. Ruffle, R. Zultan, T. Dwolatzky
  7. Fairness in Winner-Take-All Markets By Björn Bartling; Alexander W. Cappelen; Mathias Ekström; Erik Ø. Sørensen; Bertil Tungodden
  8. Nudging in Education By Damgaard, Mette Trier; Nielsen, Helena Skyt
  9. Ambiguity Attitudes in the Loss Domain: Decisions for Self versus Others By Xu, Yilong; Xu, Xiaogeng; Tucker, Steven
  10. Long-run effects of family policies: An experimental study of the Chinese one-child policy By Carlsson, Fredrik; Lampi, Elina; Martinsson, Peter; Tu, Qin; Yang, Xiaojun
  11. Help, Prejudice and Headscarves By Artavia-Mora, Luis; Bedi, Arjun S.; Rieger, Matthias

  1. By: Sanjit Dhami; Mengxing Wei; Ali al-Nowaihi
    Abstract: We consider a theoretical model of a public goods game that incorporates reciprocity, guilt-aversion/surprise-seeking, and the attribution of intentions behind these emotions. In order to test our predictions, we implement the ‘induced beliefs method’ and a within-subjects design, using the strategy method. We find that all our psychological variables contribute towards the explanation of contributions. Guilt-aversion is pervasive at the individual-level and the aggregate-level and it is relatively more important than surprise-seeking. Our between-subjects analysis confirms the results of the within-subjects design.
    Keywords: public goods games, psychological game theory, reciprocity, surprise-seeking/guilt-aversion, attribution of intentions, induced beliefs method, within and between subjects designs
    JEL: D01 D03 H41
    Date: 2018
  2. By: Andreas Bergh; Philipp Christoph Wichardt
    Abstract: This paper reports results from a classroom dictator game comparing the effects of three different sets of standard instructions. The results show that seemingly small differences in instructions induce fundamentally different perceptions regarding entitlement. Behavior is affected accordingly, i.e. instructions inducing subjects to perceive the task as distributive rather than a task of generosity lead to higher allocations to receivers (average 52% vs. 35%). A theoretical explanation integrating monetary as well as social incentives and emphasizing potential effects of uncertainty about the latter is discussed (cf. Bergh and Wichardt, 2018).
    Keywords: dictator games, framing effects, property rights, social preferences
    JEL: C70 C91 D63
    Date: 2018
  3. By: Emeric Henry (ECON - Département d'économie - Sciences Po); Nicolas Jacquemet (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Roberto Galbiati (ECON - Département d'économie - Sciences Po)
    Abstract: We study how cooperation-enforcing institutions dynamically affect values and behavior using a lab experiment designed to create individual specific histories of past institutional exposure. We show that the effect of past institutions is mostly due to " indirect " behavioral spillovers: facing penalties in the past increases partners' cooperation in the past, which in turn positively affects ones' own current behavior. We demonstrate that such indirect spillovers induce persistent effects of institutions. However, for interactions that occur early on, we find a negative effect of past enforcement due to differential learning under different enforcement institutions.
    Keywords: repeated games,persistence of institutions,Laws,social values,cooperation,learning,spillovers,experiments
    Date: 2017–07–01
  4. By: Yayan Hernuryadin (School of Economics and Management, Kochi University of Technology); Koji Kotani (School of Economics and Management, Kochi University of Technology); Yoshio Kamijo (School of Economics and Management, Kochi University of Technology)
    Abstract: Three societies of the hunter-gatherer, the agrarian and the industrial represent the course of human history for cultural and economic development. In this course, each society exhibits distinct cultures and daily life practices that shape human behaviors and preferences, characterizing temporal actions and consequences at individual and group levels. We examine individual and group time preferences as well as their relation across the three societies. To this end, we conduct a field experiment of eliciting individual and group discount factors in the societies of Indonesia: (i) the fisheries, (ii) the farming and (iii) the urban ones as a proxy of the hunter-gatherer, the agrarian and the industrial, respectively. We find that both individual and group discount factors are the lowest (highest) in the fisheries (agrarian) society among the three, while those in the urban are in the middle. We identify that the determinants of group discount factors differ across societies; members of the lowest and middle discount factors in a group play an important role in forming a group discount factor in fisheries societies, while only the member with the middle discount factor is a key in agrarian and urban societies. Overall, our results suggest that individual and group discount factors non-monotonically change as societies transition from fisheries to agrarian and from agrarian to urban ones, and comparatively shortsighted people (the lowest and middle) are more influential than farsighted people in forming group time preferences.
    Keywords: discount factors, individual and group time preferences, fisheries, farming, urban
    Date: 2018–06
  5. By: Yosuke Hashidate (CIRJE, Faculty of Economics, The University of Tokyo)
    Abstract: This paper provides a cognitive foundation for social image concerns by studying preferences over menus; that is, this paper studies the social-image formation in the decision-making process. This framework has a two-stage decision problem. At the first stage, the decision maker chooses a menu; at the second stage, she chooses an option from the chosen menu at the first stage. In social image theory, the decision maker cares about how her choice behaviors are perceived by other agents. We do anticipate such emotions at the second stage and we, therefore, study plausible axioms at the first stage. However, the decision maker may feel the emotions even in the first stage. By capturing such a trade-off as an endogenous reference-point formation, this paper builds an axiomatic model, in which the trade-offs in the first stage determine social image concerns; that is, the factors behind social image concerns depend on endogenous reference points. This paper explores both the anticipation of image concerns and the formation of image concerns. This paper uniquely identifies the building blocks of the model. Moreover, this paper studies menu effects in terms of pride-seeking preferences, shame-averse preferences, and temptation-driven preferences, which can lead to violations of Weak Axiom of Revealed Preference (WARP).
    Date: 2018–04
  6. By: Y. Bayer, B.J. Ruffle, R. Zultan, T. Dwolatzky (Wilfrid Laurier University)
    Abstract: Cognitive impairment has a detrimental influence on the decision-making capabilities of older people. This study investigates the ways in which the time preferences of older adults with mild cognitive impairment (MCI) are influenced by their executive cognitive abilities. Within the framework of this study, older adults underwent a cognitive evaluation using a computerized cognitive assessment battery and then responded to a questionnaire eliciting their preferences for changing amounts of money and time periods. We found that those individuals with better executive cognitive abilities displayed a lower rate of subjective discounting. This study advances our understanding of economic decision-making in old age, especially as influenced by cognitive decline. We hope that our findings will serve as a catalyst in the construction of financial tools relevant to the growing population of older people in society, and thus help to alleviate negative phenomena resulting in older individuals being subjected to fraud and discrimination.
    Keywords: mild cognitive impairment, experimental economics, time preferences, financial decision-making, executive functions, old age
    Date: 2018–05–30
  7. By: Björn Bartling; Alexander W. Cappelen; Mathias Ekström; Erik Ø. Sørensen; Bertil Tungodden
    Abstract: The paper reports the first experimental study on people’s fairness views on extreme income inequalities arising from winner-take-all reward structures. We find that the majority of participants consider extreme income inequality generated in winner-take-all situations as fair, independent of the winning margin. Spectators appear to endorse a “factual merit” fairness argument for no redistribution: the winner deserves all the earnings because these earnings were determined by his or her performance. Our findings shed light on the present political debate on redistribution, by suggesting that people may object less to certain types of extreme income inequality than commonly assumed.
    Keywords: winner-take-all reward structures, fairness, income inequality
    JEL: C91 D63
    Date: 2018
  8. By: Damgaard, Mette Trier (Aarhus University); Nielsen, Helena Skyt (Aarhus University)
    Abstract: Can we nudge children, adolescents and their parents to make better decisions on education? And can we nudge teachers to support and encourage better decision making? Education decisions are taken at young ages and involve immediate costs and potential, future benefits. In such settings behavioural barriers (e.g. lack of self-control, limited attention and social norms) likely influence choices and this may motivate the use of low cost 'nudges' to gently push behaviour in the desired direction. Our review of nudging interventions shows that while nudging often has positive effects, the greatest effects often arise for individuals affected most by the behavioural barrier targeted by the intervention. Hence understating underlying behavioural mechanisms is crucial. Negative effects may arise in situations where nudges potentially crowd-out intrinsic motivation, if nudges pressurise individuals, or in situations where the choice architect has an insufficient understanding of behavioural mechanisms.
    Keywords: behavioural bias, boost policies, human capital investment
    JEL: D03 D04 I20
    Date: 2018–04
  9. By: Xu, Yilong (University of Heidelberg); Xu, Xiaogeng (Dept. of Economics, Norwegian School of Economics and Business Administration); Tucker, Steven (Waikato Management School, University of Waikato)
    Abstract: We study whether people’s ambiguity attitudes differ when deciding for themselves or for others in the loss domain. We find no systematic differences in ambiguity attitudes between self- and other-regarding decision-making. Our results are consistent with the loss part of the fourfold pattern of ambiguity attitudes.
    Keywords: Ambiguity attitudes; Decision-making for others; Losses and uncertainty
    JEL: C91 D81
    Date: 2018–05–25
  10. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Lampi, Elina (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Tu, Qin (School of Economics and Resource Management, Beijing Normal University, Beijing, China); Yang, Xiaojun (School of Public Policy and Administration, Xi’an Jiaotong University, Xi’an, China)
    Abstract: We present lab-in-the-field experimental evidence of the effects of the Chinese one-child policy on individuals’ preferences and behavior as adults. The experiments were conducted in three different provinces because the policy was not strictly implemented at the same time in all provinces. We measure risk and time preferences, as well as subjects’ competitiveness, cooperation, and bargaining behavior, sampling individuals born both before and after the introduction of the policy. Overall, we do not find any sizeable or statistically significant effects of the one-child policy on preferences or behavior in any of the experiments. These results hold for heterogeneity in the timing of the implementation of the OCP in different provinces, for heterogeneity among individuals, and for various robustness checks.
    Keywords: one-child policy; lab-in-the-field experiment; China.
    JEL: C91 D03 D10 I31 P30
    Date: 2018–05
  11. By: Artavia-Mora, Luis (ISS, Erasmus University Rotterdam); Bedi, Arjun S. (ISS, Erasmus University Rotterdam); Rieger, Matthias (ISS, Erasmus University Rotterdam)
    Abstract: This paper employs a natural field experiment in the Netherlands to test whether individuals intuitively help strangers with different group identities. We implement time manipulations in an everyday task to stimulate intuitive versus deliberate decision-making and thereafter examine helpfulness towards a female stranger with in-group (native) or out-group (Muslim) appearance. We find that time delay decreases helping rates. In contrast, regardless of time manipulation, out-group appearance does not influence helping rates. Overall, subjects are intuitively predisposed to help, independent of identity. We discuss our findings with respect to the literature on in-group favoritism and the cognitive origins of human cooperation.
    Keywords: help, cooperation, in-group favoritism, Muslim, dual-process of cognition, natural field experiment, The Netherlands
    JEL: D03 D63 D64
    Date: 2018–04

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