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on Cognitive and Behavioural Economics |
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Issue of 2018‒09‒03
eleven papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Shyamal Chowdhury (University of Sydney, IZA Bonn); Matthias Sutter (Max Planck Institute for Research on Collective Goods); Klaus F. Zimmermann (Maastricht University, UNU-MERIT and GLO) |
| Abstract: | Economic preferences – like time, risk and social preferences – have been shown to be very influential for real-life outcomes, such as educational achievements, labor market outcomes, or health status. We contribute to the recent literature that has examined how and when economic preferences are formed, putting particular emphasis on the role of intergenerational transmission of economic preferences within families. Our paper is the first to run incentivized experiments with fathers and mothers and their children by drawing on a unique dataset of 1,999 members of Bangladeshi families, including 911 children, aged 6-17 years, and 544 pairs of mothers and fathers. We find a large degree of intergenerational persistence as the economic preferences of mothers and fathers are significantly positively related to their children’s economic preferences. Importantly, we find that socio-economic status of a family has no explanatory power as soon as we control for parents’ economic preferences. A series of robustness checks deals with the role of older siblings, the similarity of parental preferences, and the average preferences within a child’s village. |
| Keywords: | Intergenerational transmission of preferences, time preferences, risk preferences, social preferences, children, parents, Bangladesh, socio-economic status, experiment |
| JEL: | C90 D1 D90 D81 D64 J13 J24 J62 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2018_04&r=cbe |
| By: | Jones, Daniel (University of Pittsburgh); Tonin, Mirco (Free University of Bozen/Bolzano); Vlassopoulos, Michael (University of Southampton) |
| Abstract: | How does pay-for-performance (P4P) impact productivity, multitasking, and the composition of workers in mission-oriented jobs? These are central issues in sectors like education or healthcare. We conduct a laboratory experiment, manipulating compensation and mission, to answer these questions. We find that P4P has positive effects on productivity on the incentivized dimension of effort and negative effects on the non-incentivized dimension for workers in non-mission-oriented treatments. In mission-oriented treatments, P4P generates minimal change on either dimension. Participants in the non-mission sector – but not in the mission-oriented treatments – sort on ability, with lower ability workers opting out of the P4P scheme. |
| Keywords: | prosocial motivation, performance pay, multitasking, sorting |
| JEL: | C91 M52 J45 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11674&r=cbe |
| By: | Blacklow, Paul (Tasmanian School of Business & Economics, University of Tasmania); Corman, Amy Beth (Deparment of Economics, University of Melbourne); Sibly, Hugh (Tasmanian School of Business & Economics, University of Tasmania) |
| Abstract: | People enjoy judging and receiving the approval of others. They may modify their behaviour in costly ways to obtain such approval. This paper presents an experiment in which some participants can, at a cost, appear to others to have a better performance on a real effort task than they really do. The only motivation for such an action is esteem seeking. The provision of esteem is also recorded. We measure esteem seeking when participants are facing both high and low performing partners. We model our experiment theoretically: individuals generate income party to undertake consumption but also partly to gain esteem. Our results are consistent with theory: those with low marginal utility of consumption engage in esteem seeking. |
| Keywords: | Esteem, Image, Laboratory Experiment |
| JEL: | C92 D91 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:tas:wpaper:27693&r=cbe |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods) |
| Abstract: | Behavioral law and economics applies the conceptual tools of behavioral economics to the analysis of legal problems and legal intervention. These models, and the experiments to test them, assume an institution free state of nature. In modern societies, the law’s subjects never see this state of nature. However a rich arrangement of informal and formal institutions creates generalized trust. If individuals are sufficiently confident that nothing too bad will happen, they are freed up to interact with strangers as if they were in a state of nature. This willingness dramatically reduces transaction cost and enables division of labor. If generalized trust can be assumed, simple economic models are appropriate. But they must be behavioral, since otherwise individuals would not want to run the risk of interaction. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2018_02&r=cbe |
| By: | Amalia Álvarez (Max Planck Institute for Research on Collective Goods); Fabian Winter (Max Planck Institute for Research on Collective Goods) |
| Abstract: | We present an online experiment in which we investigate the impact of perceived social acceptability on online hate speech, and measure the causal effect of specific interventions. We compare two types of interventions: counter-speaking (informal verbal sanctions) and censoring (deleting hateful content). The interventions are based on the belief that individuals infer acceptability from the context, using previous actions as a source of normative information. The interventions are based on the two conceptualizations found in the literature: 1) what do others normally do, i.e., descriptive norms; and 2) what happened to those who violated the norm, i.e., injunctive norms. Participants were significantly less likely to engage in hate speech when prior hate content had been moderately censored. Our results suggest that normative behavior in online conversations might, in fact, be motivated by descriptive norms rather than injunctive norms. With this work we present some of the first experimental evidence investigating the social determinants of hate speech in online communities. The results could advance the understanding of the micro-mechanisms that regulate hate speech. Also, such findings can guide future interventions in online communities that help prevent the spread of hate. |
| Keywords: | online experiments, social norms, hate speech, social influence, pluralistic societies |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2018_03&r=cbe |
| By: | Lorko, Matej; Servátka, Maroš; Zhang, Le |
| Abstract: | The success of a business project often relies on the accuracy of its project duration estimates. Inaccurate and overoptimistic project schedules can result in significant project failures. In this paper, we explore whether the presence of anchors, such as relatively uninformed suggestions or expectations of the duration of project tasks, play a role in the project estimating and planning process. We conduct a controlled laboratory experiment to test the effect of anchors on task duration estimates. We find strong anchoring effects and systematic estimation biases that do not vanish even after the task is repeatedly estimated and performed. We also find that such persisting biases can be caused by not only externally provided anchors, but also by the planner’s own initial task duration estimate. |
| Keywords: | Project management, project planning, time management, anchors, anchoring effect, task duration, duration estimation, time estimation, anchoring bias |
| JEL: | C91 D83 D92 O21 O22 |
| Date: | 2018–08–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88456&r=cbe |
| By: | Johnson, David; Ryan, John |
| Abstract: | We explore the consistency of the characteristics of individuals who participate in studies posted on Amazon Mechanical Turk (AMT). The primary individuals analyzed in this study are subjects who participated in at least two of eleven experiments that were run on AMT between September of 2012 to January of 2018. We demonstrate subjects consistently report a series of demographic and personality characteristics. Further, subjective willingness to take risk is found to be significantly correlated with decisions made in a simple lottery experiment with real stakes - even when the subjective risk measure is reported months, sometimes years, in the past. This suggests the quality of data obtained via AMT is not significantly harmed by the lack of control over the conditions under which the responses are recorded. |
| Keywords: | Online Experiment; Risk; Consistency; Amazon Mechanical Turk; Experiment |
| JEL: | C81 C89 C90 C99 |
| Date: | 2018–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88450&r=cbe |
| By: | Yutaka Kayaba (University of Tokyo); Hitoshi Matsushima (University of Tokyo); Tomohisa Toyama (International Christian University) |
| Abstract: | This study theoretically investigates an infinitely repeated prisoners' dilemma in which the monitoring technology is imperfect and private. In contrast to previous works, we shed light on the psychological aspect of monitoring imperfection rather than its informational aspect. We demonstrate a behavioral model in which a player is motivated not only by pure self-interest but also by social preferences such as reciprocity and naïveté. We then focus on the possibility that a generous tit-for-tat strategy, a simple Markovian stochastic strategy, satisfies equilibrium properties. We show that the prediction from the behavioral model is opposed to, but much more compatible with, daily experiences and existing experimental evidence than the prediction from the standard model with pure self-interest. |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:cfi:fseres:cf432&r=cbe |
| By: | Obloj, Tomasz; Zenger, Todd |
| Abstract: | We investigate the mechanisms that shape social comparison in organizations and generate social comparison costs. In particular, we focus on heterogeneity in the strength and type of incentives and argue that, from an efficient design perspective, such variance in rewards is a double-edged sword. While the sorting and incentive effects that result may increase productivity, the social comparison processes that arise may dampen it. We posit that the mechanisms underlying these behavioral costs are shaped not only by the magnitude of reward variance, but by the formal and informal design elements shaping the distance of advantaged peers. In other words, the more proximate socially, structurally or geographically are those to whom one socially compares, the larger the behavioral response. Empirically, we use an unanticipated event during which outlets of a bank, previously operating under essentially homogenous incentives, were assigned to tournament groups with differing ex ante probabilities of winning a prize — an event that increases variance in awards and hence generates an impetus for social comparison. We find that units with more socially, geographically, and structurally proximate peers assigned to ‘advantaged’ tournament groups decreased their productivity. We discuss implications of these results for organizational design and boundaries. |
| Keywords: | Incentives; Social Comparison; Envy; Productivity; Organization Design |
| JEL: | L10 |
| Date: | 2016–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1178&r=cbe |
| By: | Bartos, Vojtech (LMU Munich); Bauer, Michal (CERGE-EI and Institute of Economic Studies); Chytilova, Julie (Institute of Economic Studies); Levely, Ian (Wageningen University) |
| Abstract: | We study two psychological channels how poverty may increase impatient behavior -- an effect on time preference and reduced attention. We measured discount rates among Ugandan farmers who made decisions about when to enjoy entertainment instead of working. We find that experimentally induced thoughts about poverty-related problems increase the preference to consume entertainment early and delay work. The effect is equivalent to a 27 p.p. increase in the intertemporal rate of substitution. Using monitoring tools similar to eye tracking, a novel feature for this subject pool, we show this effect is not due to a lower ability to sustain attention. |
| Keywords: | poverty; scarcity; time discounting; preferences; inattention; decision-making process; |
| Date: | 2018–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:108&r=cbe |
| By: | René Böheim; Dominik Grübl; Mario Lackner |
| Abstract: | We analyze performance under pressure and estimate the causal effect of audience size on the success of free throws in top-level professional basketball. We use data from the National Basketball Association (NBA) for the seasons 2007/08 through 2015/16. We exploit the exogenous variation in weather conditions on game day to establish a causal link between attendance size and performance. Our results confirm a sizeable and strong negative effect of the number of spectators on performance. Home teams in (non-critical) situations at the beginning of games perform worse when the audience is larger. This result is consistent with the theory of a home choke rather than a home field advantage. Our results have potentially large implications for general questions of workplace design and help to further understand how the social environment affects performance. We demonstrate that the amount of support, i.e. positive feedback, from a friendly audience does affect performance. |
| Keywords: | performance under pressure; choking; social pressure |
| JEL: | D03 J24 M54 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2018_09&r=cbe |