nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2018‒11‒19
six papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. A Laboratory Study of Nudge with Retirement Savings By Dina Tasneem; Audrey Azerot; Marine de Montaignac; Jim Engle-Warnick
  2. Have your cake and eat it too: real effort and risk aversion in schoolchildren By Della Giusta, Marina; Di Girolamo, Amalia
  3. Revisiting the Impact of Impure Public Goods on Consumers' Prosocial Behavior: A Lab Experiment in Shanghai By Qinxin Guo; Enci Wang; Yongyou Nie; Junyi Shen
  4. Stochastic Impatience and the Separation of Time and Risk Preferences By David Dillenberger; Daniel Gottlieb; Pietro Ortoleva
  5. A Laboratory Study of the Effect of Financial Literacy Training on Retirement Savings By Dina Tasneem; Audrey Azerot; Marine de Montaignac; Jim Engle-Warnick
  6. 20 years of emotions and risky choices in the lab. A meta-analysis By Matteo M. Marini

  1. By: Dina Tasneem; Audrey Azerot; Marine de Montaignac; Jim Engle-Warnick
    Abstract: We report results from an on-line economics experiment that examines the effect of nudging retirement savings decisions. In the experiments, participants make decisions in a finitely repeated retirement savings game, in which income during working years is uncertain, and retire-ment age is known. Participants, who are household financial decision-makers, are nudged with automatic savings in each period of the game. We find that that the nudge simply replaced nat-ural decision-making observed in the absence of a nudge in this experiment, even to the extent that it resulted in nearly identical inferred decision rules. This surprising result highlights the unpredictability of the effect of nudging human behavior.
    Keywords: Precautionary Savings,Retirement Savings,Life-cycle Models,Dynamic Optimization,Decision Heuristics,Nudge,Choice Architecture,
    JEL: C91 E21 C61
    Date: 2018–07–23
  2. By: Della Giusta, Marina; Di Girolamo, Amalia
    Abstract: There is a large body of evidence documenting gender differences in preferences and their effects on a range of behaviours (including health and risky behaviours) and choices (including education, labour market, savings, marriage, and fertility). A key issue in order to mitigate some of the undesirable effects of these differences (the tendency for boys to engage in more risky behaviours or for girls to avoid choices that might instead benefit them) is establishing how soon such differences arise. Gender differences in competitiveness and risk aversion have been widely documented both in the lab and the field (Falk et al, 2015), and more recently adapting experiments normally performed with adults to children (Samak, 2013; Harbaugh et al., 2002). We advance this literature with a study of primary school children which consists of an innovative two-stage task game addressing both effort and risk: in the first stage a real effort task allows children to accumulate points playing a video game, and in the second they play a lottery game in which probabilities are presented visually. The two-stage task game is designed in order to avoid both the valuation and the probability problems that children normally face in such tasks. Our findings confirm the existence of gender differences in risk aversion once controlling for performance in a gender neutral task in schoolchildren, and contribute a visual way of using lotteries with children that yields results consistent with rational behaviour
    Keywords: Gender; Risk Aversion; Child Preferences; Artefactual Field Experiment
    JEL: C79 C90 D81 J70
    Date: 2018–07
  3. By: Qinxin Guo (Graduate School of Economics, Kobe University, Japan); Enci Wang (School of Economics, Shanghai University, China); Yongyou Nie (School of Economics, Shanghai University, China); Junyi Shen (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: In this study, we implemented a dictator game experiment to examine how the increase of the public characteristic in an impure public good affects individuals’ prosocial behavior. A within-subject design was used in the experiment. The dictator game was repeated six times with an impure public good introduced in four of them. We observe that the increase of the public characteristic in an impure public good partly crowds out individuals’ subsequent donations, which could be explained by a seemingly “mental accounting” mental process. In addition, we also find that the selfish behavior of individuals in dictator games with impure public goods, to some extent, has an inertia influence on their subsequent donations when the impure public good is removed.
    Keywords: Impure public goods, Dictator game, Multiple dictators, Mental accounting
    Date: 2018–11
  4. By: David Dillenberger (Department of Economics, University of Pennsylvania); Daniel Gottlieb (Department of Economics, Washington University in St. Louis); Pietro Ortoleva (Department of Economics, Princeton University)
    Abstract: We study how the separation between time and risk preferences relates to a new behavioral property that generalizes impatience to stochastic environments: Stochastic Impatience. We show that Stochastic Impatience holds if and only if risk aversion is \not too high" relative to the inverse elasticity of intertemporal substitution. This result has implications for many known models. For example, in the models of Epstein and Zin (1989) and Hansen and Sargent (1995), Stochastic Impatience is violated for all commonly used parameters. If Stochastic Impatience is taken normatively, this suggests a limit on the amount of separation between time and risk preference; otherwise, it provides a simple one-question test for it.
    Keywords: Stochastic Impatience, Epstein and Zin preferences, Separation of Risk and Time preferences, Risk Sensitive Preferences, Non-Expected Utility
    JEL: D81 D90 G11
    Date: 2018–09–08
  5. By: Dina Tasneem; Audrey Azerot; Marine de Montaignac; Jim Engle-Warnick
    Abstract: We report results from an economics experiment that examines the role of financial literacy in retirement savings. In the experiments, participants make decisions in a retirement savings game, in which income during working years is uncertain. Participants are nudged to varying degrees with automatic savings in each period of the game. Some participants receive financial literacy training in the form of training to compute the expected savings needed at retirement to smooth consumption over the entire life cycle. We find ev-idence that literacy increases savings and improves efficiency. Our finding has implications for choice architecture for retirement savings.
    Keywords: Precautionary Savings,Retirement Savings,Life-cycle Model,Dynamic Optimization,Nudge,Financial Literacy,Decision Heuristics,
    JEL: C90
    Date: 2018–07–30
  6. By: Matteo M. Marini (LEE & Economics Department, Universitat Jaume I, Castellón, Spain; Economics Department, Università degli Studi dell’Insubria, Italy)
    Abstract: The paper is a meta-analysis of experimental studies dealing with the impact of incidental emotions on risky choices, so as to explain traditional heterogeneity of outcomes in the field. After performing an advanced search in Google Scholar and filtering out studies that do not match a list of selection criteria, I include 16 manuscripts from which 46 observations are drawn at the treatment level. At this point, I code a set of moderator variables representing experimental protocols and calculate Cohen (1988)’s d effect size as dependent variable of a weighted least squares (WLS) regression where larger studies are given more weight. Among the results, which are robust to different techniques for computing standard errors, I find that emotions induce higher risk aversion when a multiple price list à la Holt and Laury (2002) is used in place of revealed preferences methods, as well as in case the risk elicitation task is framed as an investment decision instead of an abstract choice. Given the variety of procedures employed in this type of experiments and in the absence of a tailor-made game to answer such research questions, I recommend faithful study replication as preferential path in order to investigate the influence of emotions on risky decision making and ensure comparability.
    Keywords: meta-analysis, experimental design, emotions, risky decision-making, effect size
    JEL: C90 D81 D91
    Date: 2018

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