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on Cognitive and Behavioural Economics |
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Issue of 2018‒12‒03
eleven papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Peter Katuscak; Tomas Miklanek |
| Abstract: | Extensive experimental research on public goods games documents that many subjects are “conditional cooperators” in that they positively correlate their contributions with (their belief about) contributions of other subjects in their group. The goal of our study is to shed light on what preference and decision-making patterns drive this observed regularity. We consider four potential explanations, including reciprocity, conformity, inequality aversion, and residual factors such as confusing and anchoring, and aim to disentangle their effects. We find that, of the average conditionally cooperative behavior in the sample, about two thirds is accounted for by residual factors, a quarter by inequality aversion and a tenth by conformity, while reciprocity plays virtually no role. These findings carry important messages about how to interpret conditional cooperation as observed in the lab and ways it can be exploited for fundraising purposes. |
| Keywords: | : conditional cooperation; public goods game; reciprocity; conformity; inequality aversion; anchoring; fundraising; |
| JEL: | H41 C91 D64 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp631&r=cbe |
| By: | Thomas Garcia (Univ Lyon, Université Lumière Lyon 2, GATE L-SE UMR 5824, F-69130 Ecully, France; QuBE - School of Economics and Finance, QUT, Brisbane, Australia); Sébastien Massoni (QuBE - School of Economics, Finance and Australian Centre for Entrepreneurship Research, QUT, Brisbane, Australia); Marie Claire Villeval (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69131 Ecully, France ; IZA, Bonn, Germany) |
| Abstract: | A donation may have ambiguous costs or ambiguous benefits. In a laboratory experiment, we show that individuals use this ambiguity strategically as a moral wiggle room to behave less generously without feeling guilty. Such excuse-driven behavior is more pronounced when the costs of a donation -rather than its benefits- are ambiguous. However, the importance of excuse-driven behavior is comparable under ambiguity and under risk. Individuals exploit any type of uncertainty as an excuse not to give, regardless of the nature of this uncertainty. |
| Keywords: | Ambiguity, excuse-driven behavior, charitable giving, social preferences, experiment |
| JEL: | C91 D64 D81 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1826&r=cbe |
| By: | Irenaeus Wolff |
| Abstract: | In contrast to standard theory, experimental participants often do not best-respond to their stated beliefs. Potential reasons are inaccurate belief reports or unstable preferences. Focusing on games in which participants can observe the revealed preferences of their opponents, this paper points out an additional reason for the lack of belief-action consistency. Whether a participant’s best-response—or a Nash-equilibrium—predicts her behaviour depends heavily on the participant believing in others’ preference stability. Believing in others’ preference stability fosters predictability because it is associated with a lower variance in the participant’s belief about her opponents’ actions, and low-variance beliefs entail more best-responding. |
| Keywords: | Preference stability, best-response, Nash-equilibrium, rational beliefs, public good, social dilemma, conditional cooperation, social preferences. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0113&r=cbe |
| By: | Joanna Douat (ESPM); Mateus Ponchio (ESPM) |
| Abstract: | Prior research on anchoring indicates that arbitrary values can influence human judgment and decision-making. However, the findings differ regarding the magnitude of this effect, implying that in some circumstances the anchoring phenomena may not occur at all. The present research suggests that this behavior is not universal and attempts to identify how consumer self-confidence (CSC), a personal trait, and product category (hedonic vs. utilitarian) may affect consumers? susceptibility to anchoring effect on participants? willingness to pay. Although the moderation relationship could not be proved, it was statistically demonstrated that the kind of consumption (utilitarian/hedonic) accounts for 25% of the variability of consumer?s willingness-to-pay. Overall, this research contributes to the literature on Consumer Behavior, by shedding light on personal traits and product features that can shape anchoring response. |
| Keywords: | Anchoring Effects, Consumer Self-Confidence, Hedonic-utilitarian consumption, Consumer Behavior; Marketing. |
| JEL: | D12 M31 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:7310340&r=cbe |
| By: | Marine Hainguerlot (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Jean-Christophe Vergnaud (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Vincent De Gardelle (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics) |
| Abstract: | Learning how certain cues in our environment predict specific states of nature is an essential ability for survival. However learning typically requires external feedback, which is not always available in everyday life. One potential substitute for external feedback could be to use the confidence we have in our decisions. Under this hypothesis, if no external feedback is available, then the agents' ability to learn about predictive cues should increase with the quality of their confidence judgments (i.e. metacognitive efficiency). We tested and confirmed this novel prediction in an experimental study using a perceptual decision task. We evaluated in separate sessions the metacognitive abilities of participants (N = 65) and their abilities to learn about predictive cues. As predicted, participants with greater metacognitive abilities learned more about the cues. Knowledge of the cues improved accuracy in the perceptual task. Our results provide strong evidence that confidence plays an active role in improving learning and performance. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-01761531&r=cbe |
| By: | Justin Dijk (Vrije Universiteit Amsterdam, PBL); Erik Ansink (Vrije Universiteit Amsterdam) |
| Abstract: | We contribute to the literature on the optimal design of auction mechanisms for the procurement of nature conservation activities. We use an economic experiment to examine whether the market efficiency of conservation auctions increases or decreases with repetition. Theory predicts that repetition facilitates collusion among sellers in procurement auctions, while behavioral economics suggests that repetition may increase market efficiency because it attenuates the endowment effect - the phenomenon that ownership of a good tends to increase one's valuation of the good. We find that of these two countervailing effects, the latter has the upper hand; average bids decrease monotonically over the consecutive auctions. Since repetition increases market efficiency, conservation contracts can be of shorter duration and procured at a higher frequency than has been suggested before. |
| Keywords: | Auctions; procurement; endowment effect; collusion; nature conservation |
| JEL: | C91 D44 H57 Q57 |
| Date: | 2018–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180093&r=cbe |
| By: | Civelli, Andrea (University of Arkansas); Deck, Cary (University of Alabama and Chapman University); LeBlanc, Justin D. (University of Arkansas); Tutino, Antonella (Federal Reserve Bank of Dallas) |
| Abstract: | This paper presents a laboratory experiment that directly tests the theoretical predictions of consumption choices under rational inattention. Subjects are asked to select consumption when income is random. They can optimally decide to reduce uncertainty about income by acquiring signals about it. The informativeness of the signals directly relates to the cognitive effort required to process the information. We find that subjects’ behavior is largely in line with the predictions of the theory: 1) Subjects optimally make stochastic consumption choices; 2) They respond to incentives and changes in the economic environment by varying their attention and consumption; 3) They respond asymmetrically to positive and negative shocks to income, with negative shocks triggering stronger and faster reactions than positive shocks. |
| Keywords: | Rational Inattention; Experimental Evidence; Information Processing Capacity; Consumption |
| JEL: | C91 D11 D8 E20 |
| Date: | 2018–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:1813&r=cbe |
| By: | Larbi Alaoui; Antonio Penta |
| Abstract: | When an individual thinks about a problem, his decision to reason further may involve a tradeo between cognitive costs and a notion of value. But it is not obvious that this is always the case, and the value of reasoning is not well-de ned. This pa- per analyzes the primitive properties of the reasoning process that must hold for the decision to stop thinking to be represented by a cost-bene t analysis. We nd that the properties that characterize the cost-bene t representation are weak and intuitive, suggesting that such a representation is justi ed for a large class of problems. We then provide additional properties that give more structure to the value of reasoning func- tion, including `value of information' and `maximum gain' representations. We show how our model applies to a variety of settings, including contexts involving sequential heuristics in choice, response time, reasoning in games and research. Our model can also be used to understand economically relevant patterns of behavior for which the cost-bene t approach does not seem to hold. These include choking under pressure and (over)thinking aversion. |
| Keywords: | cognition and incentives, choice theory, reasoning, fact-free learning, sequential heuristics |
| JEL: | D01 D03 D80 D83 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1621&r=cbe |
| By: | David S. Ahn (University of California, Berkeley); Ryota Iijima (Cowles Foundation, Yale University); Yves Le Yaouanq (Ludwig-Maximilians-Universitat); Todd Sarver (Duke University) |
| Abstract: | We propose nonparametric de?nitions of absolute and comparative naivete. These de?nitions leverage ex-ante choice of menu to identify predictions of future behavior and ex-post (random) choices from menus to identify actual behavior. The main advantage of our de?nitions is their independence from any assumed functional form for the utility function representing behavior. An individual is sophisticated if she is indi?erent ex-ante between retaining the option to choose from a menu ex-post or committing to her actual distribution of choices from that menu. She is naive if she prefers the flexibility in the menu, reflecting a mistaken belief that she will act more virtuously than she actually will. We propose two de?nitions of comparative naivete and explore the restrictions implied by our de?nitions for several prominent models of time inconsistency. |
| Keywords: | Naive, Sophisticated, Time inconsistent, Comparative statics |
| JEL: | D90 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2074r&r=cbe |
| By: | Pejsachowicz, Leonardo; Toussaert, Séverine |
| Abstract: | In a standard model of menu choice, we examine the behavior of an agent who applies the following Cautious Deferral rule: “Whenever in doubt, don't commit; just leave options open.” Our primitive is a complete preference relation ≽ that represents the agent's choice behavior. The agent's indecisiveness is captured by means of a possibly incomplete (but otherwise rational) preference relation ≽ˆ. We ask when ≽ can be viewed as a Cautious Deferral completion of some incomplete ≽ˆ. Under the independence and continuity assumptions commonly used in the menu choice literature, we find that even the smallest amount of indecisiveness is enough to force ≽, through the above deferral rule, to exhibit preference for flexibility on its entire domain. Thus we highlight a fundamental tension between non-monotonic preferences, such as preferences for self-control, and tendency to defer choice due to indecisiveness. |
| Keywords: | Incomplete preferences Preference for flexibility Choice deferral |
| JEL: | J1 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:83566&r=cbe |
| By: | Michal Bauer; Jana Cahlikova; Dagmara Celik Katreniak; Julie Chytilova; Lubomir Cingl; Tomas Zelinsky |
| Abstract: | This paper provides strong evidence supporting the long-standing speculation that decisionmaking in groups has a dark side, by magnifying the prevalence of anti-social behavior towards outsiders. A large-scale experiment implemented in Slovakia and Uganda (N=2,309) reveals that deciding in a group with randomly assigned peers increases the prevalence of anti-social behavior that reduces everyone’s payoff but which improves the relative position of own group. The effects are driven by the influence of a group context on individual behavior, rather than by group deliberation. The observed patterns are strikingly similar on both continents. |
| Keywords: | antisocial behavior; aggressive competitiveness; group membership; group decision-making; group conflict; |
| JEL: | C92 C93 D01 D64 D74 D91 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp632&r=cbe |