nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2018‒08‒27
nine papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Video Recordings in Experiments – Are There Effects on Self-Selection or the Outcome of the Experiment? By Tim Lohse; Salmai Qari
  2. Inequality, envy and personality in public goods: An experimental study By Bereket Kebede; Nicole Gross-Camp; Adrian Martin; Shawn McGuire; Joseph Munyarukaza
  3. Does time inconsistency differ between gain and loss? An intra-personal comparison using a non-parametric elicitation method (A revised version) By Shotaro Shiba; Kazumi Shimizu
  4. Leveraging the Honor Code: Public Goods Contributions under Oath By Jérôme Hergueux; Nicolas Jacquemet; Stéphane Luchini; Jason Shogren
  5. Willingness to take risk: The role of risk conception and optimism By Thomas Dohmen; Simone Quercia; Jana Willrodt
  6. The Doors of Perception By Gary Charness; Alessandro Sontuoso; ;
  7. Better to Have Led and Lost than Never to Have Led at All? Competitive Dethronement, the Endowment Effect, and Risk Taking By Obloj, Tomasz; Gutierrez, Cédric; Douglas, Frank
  8. Fear, populism, and the geopolitical landscape: The “sleeper effect” of neurotic personality traits on regional voting behavior in the 2016 Brexit and Trump votes By Obschonka, Martin; Stuetzer, Michael; Rentfrow, Peter J.; Lee, Neil; Gosling, Samuel D.; Schmitt-Rodermund, Eva
  9. Inequality, Social Distance, and Giving By Nicolas J. Duquette; Enda Hargaden

  1. By: Tim Lohse; Salmai Qari
    Abstract: The use of video recordings in experimental economics has become increasingly popular. However, little attention is paid to how this might affect the composition of the participating subjects and the intended treatment effect. We make a first attempt to shed light on these issues and address them in an incentivized face-to-face tax compliance experiment. The experiment contains two dimensions; i) the level of the fine for non-compliance; and ii) the presence of a recording video camera. The 2x2 design frees the intended treatment effect of the fine from any effect resulting from the announced use of a camera. Our findings point in the direction that neither gender nor personality traits nor other individual characteristics seem to have the explanatory power to predict participation in sessions’ with or without a camera, respectively. Most importantly, the presence of a recording video camera does not affect subjects’ observed decision behavior in the actual experiment.
    Keywords: Laboratory experiments, subject pools, convenience samples, video recordings, face-to-face interaction, tax compliance, cheating
    JEL: C90 C91 H26
    Date: 2018
  2. By: Bereket Kebede; Nicole Gross-Camp; Adrian Martin; Shawn McGuire; Joseph Munyarukaza
    Abstract: This paper examines the impact of inequality on contributions to public goods focusing on the mediating role of personality using an inequality aversion model as a theoretical framework and experimental data from rural Rwanda. As predicted by the theoretical model, low-income players contribute less. We examine the predictive power of two personality approaches. The first is a person-centred approach using latent class analysis (LCA) to identify types of individuals with specific constellation of Big Five dimensions. The second focuses on individual dimensions of Big Five. While the person-centred approach has no explanatory power, one dimension of Big Five, Extraversion, is a significant and robust determinant; low-income players with higher Extraversion significantly reduce their contribution. Further exploratory analyses focusing on two dimensions of Big Five reveal that it does not provide any additional explanation compared to when each dimension is considered.
    Keywords: public goods games; personality; inequality; envy; Rwanda
    JEL: C93 H41 D63 O12 O55
    Date: 2018
  3. By: Shotaro Shiba (Graduate School of Economics, Waseda University.); Kazumi Shimizu (Graduate School of Economics, Waseda University.)
    Abstract: Several studies in the time preference literature have found time inconsistency (TI) of both gain and loss preferences. However, the relationship between the two within the same person remains unclear; that is, does an individual who demonstrates TI for gain outcomes do so for loss as well? This paper reports the individual’s TI for both gain and loss in a laboratory setting. To compare individuals’ TI for gain and loss precisely, we allowed the experiment to test for so-called future bias, which has been a focus area in recent TI literature. Further, we measured the level of TI rather than only identifying whether TI was present. We used a non-parametric elicitation method to avoid any specification error in the analysis. Based on this setting, we could examine the intra-personal relationship of TI for gain and loss–whether the same person shows similar TI of gain preference and TI of loss preference. Our findings are as follows: First, we found future bias in preference for not only gain but also loss, and confirmed that this tendency was consistent with previous findings on preference for gain. Second, such TI tended to have a positive relationship at the individual level for both gain and loss. Participants who exhibited TI when they chose gain tended to exhibit similar TI when they chose loss. These results suggest that people’s perception of time is important in time preference; how far they perceive the future in their mind may play a crucial role in TI.
    Keywords: time inconsistency, sign effect, non-parametric elicitation, future bias, intra-personal comparison
    Date: 2018–08
  4. By: Jérôme Hergueux (ETH Zurich); Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Stéphane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales); Jason Shogren (Departement of Economics and Finance, University of Wyoming - UW - University of Wyoming)
    Abstract: Real economic commitment (or the lack of it) of others affects a person's preferences to cooperate. But what if the commitment of others cannot be observed ex ante? Herein we examine how a classic non-monetary institution– a solemn oath of honesty –creates economic commitment within the public goods game. Commitment-through-the-oath asks people to hold themselves to a higher standard of integrity. Our results suggest the oath can increase cooperation (by 33%)– but the oath does not change preferences for cooperation. Rather people react quicker and cooperate, taking less time to ponder on the strategic free riding behavior.
    Keywords: WorkingPublic good game,Social Preference,Truth Keywords: Public good game
    Date: 2016–10
  5. By: Thomas Dohmen (Universität Bonn); Simone Quercia (University of Bonn); Jana Willrodt (University of Duesseldorf)
    Abstract: We show that the disposition to focus on favorable or unfavorable outcomes of risky situations affects willingness to take risk as measured by the general risk question. We demonstrate that this disposition, which we call risk conception, is strongly associated with optimism, a stable facet of personality and that it predicts real-life risk taking. The general risk question captures this disposition alongside pure risk preference. This enlightens why the general risk question is a better predictor of behavior under risk across different domains than measures of pure risk preference. Our results also rationalize why risk taking is related to optimism.
    Keywords: risk, optimism, behavior
    JEL: D91 C91 D81 D01
    Date: 2018–08
  6. By: Gary Charness (Department of Economics, University of California, Santa Barbara); Alessandro Sontuoso (Philosophy, Politics and Economics, University of Pennsylvania); ;
    Abstract: We investigate how a player’s strategic behavior is affected by the set of notions she uses in thinking about the game, i.e., the “frame”. To do so, we consider matching games where two players are presented with a set of objects, from which each player must privately choose one (with the goal of matching the counterpart’s choice). We propose a behavioral theory positing that different player types are aware of different attributes of the strategy options, hence different frames; we then rationalize why differences in players’ frames may lead to differences in choice behavior. Unlike previous theories of framing, our model features an epistemic structure allowing for the case in which an individual learns new frames, given some initial unawareness (of the fact that her perception of attributes may be incomplete). To test our model, we introduce an experimental design in which we bring about different frames by manipulating subjects’ awareness of various attributes. The experimental results provide striking support for our theory.
    Keywords: frames, focal points, unawareness, coordination games
    JEL: C72 C91
    Date: 2018–08
  7. By: Obloj, Tomasz; Gutierrez, Cédric; Douglas, Frank
    Abstract: In this paper, we develop a theoretical model and offer a first empirical test of how competitive dethronement affects managerial risk taking. Drawing on the mechanism of endowment effect and reference-dependent utility theory, we predict that former market leaders take more risks compared to, otherwise identical, competitors. We empirically test this prediction using two contexts allowing us to use different methods to operationalize risk. The first setting draws on field data from a two-month banking sales contest. The second, quasi-laboratory, data comes from an educational game. Consistent with model’s prediction, we find that dethronement is associated with increased risk taking but that the endowment effect leading to such response decays over time. In contrast, a mere decline in performance ranking does not have the same effect.
    Keywords: Competitive Dethronement; Endowment Effect; Risk Taking
    JEL: D81
    Date: 2017–11–01
  8. By: Obschonka, Martin; Stuetzer, Michael; Rentfrow, Peter J.; Lee, Neil; Gosling, Samuel D.; Schmitt-Rodermund, Eva
    Abstract: Two recent electoral results - Donald Trump’s election as US president and the UK’s Brexit vote - have re-ignited debate on the psychological factors underlying voting behavior. Both campaigns promoted themes of fear, lost pride, and loss aversion, which are relevant to the personality dimension of Neuroticism, a construct previously not associated with voting behavior. To that end, we investigate whether regional prevalence of neurotic personality traits (Neuroticism, Anxiety, Depression) predicted voting behavior in the US (N = 3,167,041) and the UK (N = 417,217), comparing these effects with previous models, which have emphasized the roles of Openness and Conscientiousness. Neurotic traits positively predicted share of Brexit and Trump votes and Trump gains from Romney. Many of these effects persisted in additional robustness tests controlling for regional industrial heritage, political attitude, and socio-economic features, particularly in the US. The “sleeper effect” of neurotic traits may profoundly impact the geopolitical landscape.
    Keywords: Voting; Neuroticism; Fear; Trump; Brexit; Election
    JEL: D72
    Date: 2018
  9. By: Nicolas J. Duquette (Sol Price School of Public Policy, University of Southern California); Enda Hargaden (Department of Economics, University of Tennessee)
    Abstract: This paper demonstrates that economic inequality has a negative, causal effect on prosocial behavior, specifcally, charitable giving. Standard theories predict that greater inequality increases giving, though income tax return data suggest the opposite may be true. We develop a new theory which, incorporating insights from behavioral economics and social psychology, predicts when greater inequality will lower charitable giving. We test the theory in an experiment on donations to a real-world charity. By randomizing the income distribution, we identify the effect of inequality on giving behavior. Consistent with our model, heightened inequality causes total giving to fall. Policy agendas that rely on charitable giving and other voluntary, prosocial behaviors to mitigate income and wealth inequality are likely to fail.
    Keywords: Inequality; charitable giving; social distance; lab experiments
    JEL: C91 D31 D64 H23 N32
    Date: 2018–07

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