nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2018‒07‒09
eleven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Using Ethical Dilemmas to Predict Antisocial Choices With Real Payoff Consequences: An Experimental Study By David L. Dickinson; David Masclet
  2. Active Learning Fosters Financial Behavior: Experimental Evidence By Tim Kaiser; Lukas Menkhoff
  3. The Truth About Tattoos By B.J. Ruffle, A. Wilson
  4. Naïve and Sophisticated Mixing: Experimental Evidence By Christian Alcocer;Thomas D. Jeitschko; Robert Shupp; Thomas D. Jeitschko; Robert Shupp
  5. Cooperation stability: A representative sample in the lab By Toke R. Fosgaard
  6. Using Rules-of-Thumb: A Note on Sophisticated vs. Simple Mixing in Two-Player Randomly Matched Games By Christian Alcocer; Thomas D. Jeitschko; Thomas D. Jeitschko
  7. Preferences for information precision under ambiguity By Roxane Bricet
  8. The price for instrumentally valuable information By Roxane Bricet
  9. Contagion of Pro- and Anti-Social Behavior Among Peers and the Role of Social Proximity By Eugen Dimant
  10. Looking at the bright side: The motivation value of overconfidence By Chen, Si; Schildberg-Hörisch, Hannah
  11. Eliciting temptation and self-control through menu choices: a lab experiment By Toussaert, Séverine

  1. By: David L. Dickinson; David Masclet
    Abstract: Anti-social behaviours are costly to organizations, and the ability to identify predictors of such behaviours can be valuable. In this paper, we used a within-subjects laboratory design to study choices in the well-known (hypothetical) Trolley problem as well as in a real payoff moneyburning experiment that can inform our understanding of moral preferences and antisocial behavior. Choices in both environments respond to incentives (i.e., the relative price of the ethical decision). Trolley problem decisions are consistent with previously known results— individuals prefer no action over action, and they prefer to avoid direct over indirect responsibility when negative consequences would be similar in either instance. In analyzing the determinants of anti-social money burning, our data identify money burning due to inequality aversion, but we also find evidence of pure nastiness (burning money of others to increase one’s advantageous inequality). Importantly, we find that willingness to commit ethically dubious acts in the Trolley problem significantly predicts money burning and, more specifically, nastiness. We conclude that choices in hypothetical environments can predict consequential and inefficient antisocial behaviours. Also, utilitarian behaviour in the Trolley dilemma is not linked to antisocial money burning, which contrasts with conclusions in the literature. Key Words: experiments, money burning, ethical dilemmas, anti-social behavioral, trolley problem
    JEL: C90 C91 Z10
    Date: 2018
  2. By: Tim Kaiser; Lukas Menkhoff
    Abstract: We conduct a randomized field experiment to study the effects of two financial education interventions offered to small-scale retailers in Western Uganda. The treatments contrast “active learning” with “traditional lecturing” within standardized lesson-plans. We find that active learning has a positive and economically meaningful impact on savings and investment outcomes, in contrast to insignificant impacts of lecturing. These results are not conditional on prior education or financial literacy. The active learning intervention seems to be superior as it works via three cognitive and non-cognitive mechanisms, i.e. increased financial knowledge, self-control, and financial confidence, while lecturing only affects financial confidence.
    Keywords: financial behavior, financial literacy, active learning, lecturing, training method, field experiment
    JEL: O16 D14 I21
    Date: 2018
  3. By: B.J. Ruffle, A. Wilson (Wilfrid Laurier University)
    Abstract: Despite their ubiquity, tattoos continue to be associated with dishonesty. Yet, scarce behavioral evidence exists. We test whether the tattooed and non-tattooed differ in their dishonest reporting in two consecutive incentivized experiments. First, subjects toss a coin privately five times and receive payment for each heads reported. After, subjects perform five additional coin tosses with the payment for each heads reported increased tenfold. We find few differences in the reporting behavior between the tattooed and non-tattooed in the number of heads reported in either reporting task or the difference between the two. Strategic dishonesty is limited to a small minority of subjects and to only one additional reported heads in the high-stakes tosses.
    Keywords: experimental economics; tattoo; honesty; strategic cheating
    JEL: C91 Z10
    Date: 2018–06–18
  4. By: Christian Alcocer;Thomas D. Jeitschko; Robert Shupp; Thomas D. Jeitschko; Robert Shupp
    Abstract: We identify a behavioral bias in games with completely mixed equilibria. Following Alcocer and Jeitschko (2014) we characterize players who, when indifferent between several optimal choices, assign an equal probability to playing any one of them, rather than following the mixing of the Nash Equilibirum. We design an experiment to test for the presence of such ‘na ??ve’ players. In a first session, we sort subjects into na ??ve players and their sophisticated counterparts, according to their tendency to skew towards uniform mixing rather than Nash equilibrium mixing. Two weeks later, each group played against varying proportions of automated players (bots) that follow varying off-equilibrium mixed strategies. Subjects categorized as na ??ve continue to tend towards uniform mixing and also are less apt to account for distortions due to off-equilibrium bots. In contrast, sophisticated players do compensate for the distortions in the game, although this compensation is not large enough to restore equilibria, implying there are predictable methods to attain above-equilibrium payoffs. We also isolate altruistic components of players’ strategies: behavior gets closer to Nash equilibria by adding transparent bots that do not directly incentivize any change in behavior but decrease the benefits of surplus maximizing behavior. Lastly, we show that the probability of being categorized as na ??ve is correlated with the performance on a quantitative test.
    Keywords: Experimental, Behavioral, Bounded Rationality, Compensated Equilib-rium, Computer Bots, Mixed Equilibria, Cognitive Heterogeneity, Na ??ve and Sophisti-cated Players
    JEL: C72 C91 D03 D83
    Date: 2018–02–15
  5. By: Toke R. Fosgaard (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: The ability to cooperate is a central condition for human prosperity, yet a trend of declining cooperation is one of the most robust observations in behavioral economics. The massive replication of declining cooperation has almost exclusively been carried out in student populations, which opens up for the question of whether the declining cooperation is predictive for the population at large. I make two steps to address this knowledge gap about cooperation stability in the general population. First, I measure repeated cooperation among students and a representative sample. Among the students, I confirm the usual decay effect of cooperation. However, among the non-students, the behavior is hugely different and approaches no decay. Secondly, I stress test the cooperation stability among non-students by manipulating the composition of preferences so that fast decay and no decay are predicted. I observe that the cooperation stability is remarkably unaffected by this manipulation.
    Keywords: Cooperation, decay, preference composition, non-students, students
    JEL: H41 C92
    Date: 2018–06
  6. By: Christian Alcocer; Thomas D. Jeitschko; Thomas D. Jeitschko
    Abstract: We postulate a new behavioral bias in how people play mixed strategies by proposing the existence of simple players who lack strategic depth; in a sense, they are the simplest possible agents that do not directly contradict the economic principle of utility maximization. We deÖne them as those who, when indi§erent between choices, follow a simple rule-of-thumb and assign a predetermined probability to each. We show that if they play 2 2 games, an equilibrium generally fails to exist. However, under random matching within populations with some proportion of simple players, equilibrium is restored and is indistinguishable from Nash equilibria in games with unrestricted strategy choices, as long as the percentage of simple mixers is small enough. As such, players are unable to take advantage of the presence of simple mixers, and simple mixers do no worse than more sophisticated players.
    Keywords: Behavioral, Bounded Rationality, Mixed Equilibria
    JEL: C72 D03 D83
    Date: 2018–01–23
  7. By: Roxane Bricet (Université de Cergy-Pontoise, THEMA)
    Abstract: This paper presents an experiment designed to measure the effect of information precision on ambiguity attitudes. The Ellsberg’s two-urns experiment is adapted so that the subjects are provided with sets of observations informing on the composition of the ambiguous urn. The central feature of the design consists in keeping the frequencies of observations constant across datasets, which allows to isolate the influence of information precision by varying the number of observations. The experimental results suggest that the availability of information does not eliminate Ellsberg-type preferences, since most subjects prefer the risky urn to the ambiguous urn to bet on both colors, but it does not translate into significantly different valuations for the risky and ambiguous prospects. Moreover, I do not find evidence that the increase in information precision is associated with higher valuation of the ambiguous prospect.
    Keywords: Preferences for information precision, Ambiguity, Ellsberg paradox, Certainty Equivalence, Preference Reversals, Experiment, Prince.
    JEL: C91 D81 D83
    Date: 2018
  8. By: Roxane Bricet (Université de Cergy-Pontoise, THEMA)
    Abstract: In this article, I propose an experimental design to measure the value of instrumental information in a model-free setup. In particular, this study provides operating instructions to test Blackwell’s ranking of informative structures under risk and under ambiguity. Drawing on Ellsberg’s two-color thought experiment, the subject faces three different types of choice situations: simple risk, compound risk and ambiguity. The original experiment is modified by enabling the agent to observe random draws with replacement so that he can learn about the composition of the urns. The proposed design allows to estimate the value of signals that differ in their informativeness and how it relates to ambiguity attitudes.
    Keywords: Value of Information, Ambiguity, Blackwell’s theorem, Reduction of Compound Lotteries, Ellsberg paradox, Experiment, Prince.
    JEL: C91 D81 D83
    Date: 2018
  9. By: Eugen Dimant (University of Pennsylvania)
    Abstract: This paper uses a novel experimental design to study the contagion of pro- and antisocial behavior and the role of social proximity among peers. Across systematic variations thereof, we find that anti-social behavior is generally more contagious than pro-social behavior. Surprisingly, we also find that social proximity amplifies the contagion of anti-social behavior more strongly than the contagion of pro-social behavior, and that anti-social individuals are most susceptible to behavioral contagion of other anti-social peers. These findings paired with the methodological contribution are informative for the design of effective norm-based policy interventions directed at facilitating (reducing) pro- (anti-)social behavior in social and economic environments.
    Keywords: Behavioral Contagion, Peer Effects, Anti-Social & Pro-Social Behavior
    Date: 2018–04
  10. By: Chen, Si; Schildberg-Hörisch, Hannah
    Abstract: The motivation value of confidence postulates that individual effort provision is increasing in beliefs on one's own productivity. This relationship also holds for overconfident individuals who have exaggerated productivity beliefs (motivation value of overconfidence). We present first empirical evidence on the existence of a motivation value of absolute overconfidence that many microeconomic models build on. Moreover, we document that debiasing information increases the accuracy of productivity beliefs of overconfident individuals but comes at the cost of diminished effort provision - a result that is of obvious relevance for many contexts such as labor relations or learning at school. As a further conceptual contribution, we offer a novel strategy for identifying significant overconfidence at the individual level.
    Keywords: overconfidence,effort provision,laboratory experiment
    JEL: C91 D91
    Date: 2018
  11. By: Toussaert, Séverine
    Abstract: Unlike present‐biased individuals, agents who suffer self‐control costs as in Gul and Pesendorfer, 2001 may choose to restrict their choice set even when they expect to resist temptation. To identify these self‐control types, I design an experiment in which the temptation was to read a story during a tedious task. The identification strategy relies on a two‐step procedure. First, I measure commitment demand by eliciting subjects' preferences over menus that did or did not allow access to the story. I then implement preferences using a random mechanism, allowing to observe subjects who faced the choice yet preferred commitment. A quarter to a third of subjects can be classified as self‐control types according to their menu preferences. When confronted with the choice, virtually all of them behaved as they anticipated and resisted temptation. These findings suggest that policies restricting the availability of tempting options could have larger welfare benefits than predicted by standard models of present bias.
    Keywords: temptation; self-control; menu choice; curiosity; experiment
    JEL: C91 D83 D99
    Date: 2018–05

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