nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2019‒01‒07
nine papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Green, yellow or red lemons? Artefactual field experiment on houses energy labels perception By Edouard Civel; Nathaly Cruz
  2. Social norms and preferences for generosity are domain dependent By Erkut, Hande
  3. Personality traits, migration intentions, and cultural distance By Fouarge, Didier; Özer, Merve Nezihe; Seegers, Philipp
  4. Conned by a Cashback? Disclosure, Nudges and Consumer Rationality in Mortgage Choice By Michael King; Anuj Singh
  5. Do Judges Hate Speculators? By Lars Hornuf; Lars Klöhn
  6. Can Whistleblower Programs Reduce Tax Evasion? Experimental Evidence By David Masclet; Claude Montmarquette; Nathalie Viennot-Briot
  7. Incentives, Performance and Choking in Darts By Bouke Klein Teeselink; Rogier J. D. Potter van Loon; Martijn (M.J.) van den Assem; Dennie van Dolder
  8. Games between responsive behavioural rules By Khan, Abhimanyu
  9. Does pre-play social interaction improve negotiation outcomes? By Brañas-Garza, Pablo; Cabrales, Antonio; Mateu, Guillermo; Sanchez, Angel; Sutan, Angela

  1. By: Edouard Civel; Nathaly Cruz
    Abstract: Labels are increasingly popular among policy-makers, companies and NGOs to improve consumers’ awareness, especially about environmental footprints. Yet, the efficiency of these informational tools is mostly looked as their ability to shift behaviors, whereas their first goal is to enable people to discriminate labelled goods. This paper studies how the complex information displayed by houses’ Energy Performance Certificates is processed by real economic agents. Through a randomized artefactual field experiment on 3,000 French subjects, we test the impact of these labels on people’s perception of a home energy performance. Results evidence that 24% of subjects did not pay attention to the energy label. Unexpectedly, we find out that gender is the most critical socio-demographic characteristic in this changing attention. We interpret this effect by the Selectivity Hypothesis: energy labels design engages more male subjects. Among attentive subjects, energy labels’ efficiency to transmit information is mixed. Subjects do identify separately each label’s grade, but their judgment is biased by prior beliefs and blurred by idiosyncratic features. Aggregated reading is Bayesian: subjects infer the label information to revise their belief on energy quality. Moreover, our results shed light on strong asymmetries. While worsening grades induce decreasing judgments on energy quality, top level quality label seems to undergo skepticism, intensifying idiosyncratic noise.
    Keywords: Information treatment, Experimental economics, Cognitive psychology, Green Value, Energy efficiency
    JEL: D03 D12 D83 L15
    Date: 2018
  2. By: Erkut, Hande
    Abstract: Experimental research on generosity has focused predominantly on behavior in the monetary domain, although many real life decisions take place in the non-monetary domain. Investigating generosity preferences in the non-monetary domain is important to understand a large class of situations ranging from effort provision at work to individual CO2; emissions. This study explores whether generosity differs between the monetary and non-monetary domains and if so why. The results show that preferences for generosity are different between domains and that different social norms of allocation can explain the greater levels of generosity in the non-monetary compared to the monetary domain.
    Keywords: generosity,dictator game,non-monetary domain,GARP,social norms
    JEL: D03 D64 C91
    Date: 2018
  3. By: Fouarge, Didier (ROA / Dynamics of the labour market); Özer, Merve Nezihe (General Economics 0 (Onderwijs)); Seegers, Philipp (General Economics 2 (Macro))
    Abstract: Personality traits are influential in individual decision-making but have been overlooked in economic models of migration. This paper investigates the relation between Big Five personality traits and individuals’ migration intentions among alternative destinations that vary in their culture distance. We hypothesize that Big Five personality traits may alter individuals’ migration decision and destination choice through their influence on perceived psychic costs and benefits of migration. We test our hypotheses using the Fachkraft survey conducted among university students in Germany. We find that extraversion and openness are positively associated with migration intentions, while agreeableness, conscientiousness, and emotional stability negatively relate to migration intentions. We show that openness positively and extraversion negatively relate to the willingness to move to culturally distant countries even when we control for geographic distance and economic differences between countries. Using language as a cultural distance indicator provides evidence that extravert individuals are less likely to prefer linguistically distant countries while agreeable individuals are more inclined to consider such countries as alternative destinations.
    Keywords: migration intention, destination choice, cultural distance, Big Five personality traits
    JEL: D91 J61 Z10
    Date: 2018–12–18
  4. By: Michael King (Department of Economics, Trinity College Dublin); Anuj Singh (Department of Economics, Trinity College Dublin)
    Abstract: Financial products with a cashback feature typically cost consumers more in the long run, but their popularity is rising in the mortgage and credit markets. Using a nationally representative online sample, we find that consumers who are younger, less educated and suffer from present bias are more likely to choose costly cash back mortgages. Through a series of experiments, we provide strong evidence that advanced disclosure improves financial decision making of customers and that negative nudges, or advertising, encourages prospective buyers into more costly mortgages. We also find evidence that consumers who demonstrate limited attention bias choose more expensive cashback mortgages that are financially equivalent at the point of drawdown.
    Keywords: Household Finance, Consumer Protection, Mortgages, Behavioural Biases, Marketing Nudges, Choice Experiment
    JEL: G21 G28 M3
    Date: 2018–11
  5. By: Lars Hornuf; Lars Klöhn
    Abstract: Historically, people have often expressed negative feelings toward speculators, a sentiment that might have even been reinforced since the latest financial crisis, during which taxpayer money was warranted or spent to bail out reckless investors. In this paper, we conjecture that judges may also have anti-speculator sentiment, which might affect their professional decision making. We asked 123 professional lawyers and 247 law students in Germany this question, and they clearly predicted that judges would have an anti-speculator bias. However, in an actual behavioral study, 185 judges did not exhibit such bias. In another sample of 170 professional lawyers, we found weak support for an anti-speculator bias. This evidence suggests that an independent audience may actually perceive unbiased judgments as biased. While the literature usually suggests that a communication problem exists between lawyers and non-lawyers (i.e. between judges and the general public), we find that this problem can also exist within the legal community.
    Keywords: speculator bias, judges, experimental law and economics
    JEL: C90 K41
    Date: 2018
  6. By: David Masclet (Univ Rennes, CNRS, CREM - UMR 6211, F-35000 Rennes, France and CIRANO); Claude Montmarquette (Centre interuniversitaire de recherche en analyse des organisations (CIRANO), Montréal, Québec (Canada)); Nathalie Viennot-Briot (Centre interuniversitaire de recherche en analyse des organisations (CIRANO), Montréal, Québec (Canada))
    Abstract: There are many ways of tackling tax evasion. The traditional strategies implemented by tax authorities fight fiscal fraud through audit and penalties. However, there also exist a plethora of unconventional methods, such as whistleblower programs. Although there is a rich economic literature on tax evasion, auditing and penalties, tax agencies’ heavy reliance on whistleblower programs has mostly been ignored. We ran an experiment in which taxpayers can punish tax evaders by reporting them to the authorities, even though it is costly for them to do so and despite the lack of any material benefit from doing so. Information on other taxpayers' compliance rates together with the opportunity to report tax evaders has a positive and a very significant effect on the level of income reported. Observing the compliance rates of other participants alone does not suffice to increase tax revenues, while the mere threat of being reported significantly increases revenues.
    Keywords: fiscal fraud, whistleblowers, ambiguous risk, laboratory experiment
    JEL: H26 H31 C91
    Date: 2018–11
  7. By: Bouke Klein Teeselink (VU Amsterdam); Rogier J. D. Potter van Loon (Erasmus University Rotterdam); Martijn (M.J.) van den Assem (VU Amsterdam); Dennie van Dolder (VU Amsterdam)
    Abstract: This paper examines the effect of incentives on the performance of darts players. We analyze four data sets comprising a total of 123,402 darts matches of professional, amateur, and youth players. The game of darts offers an attractive natural research setting, because performance can be observed at the individual level and without the obscuring effects of risk considerations and the behavior of others. We find that amateur and youth players perform better under moderately higher incentives, but choke when the incentives are really high. Professional players similarly display better performance under higher incentives, but appear less susceptible of choking. These results speak to a growing literature on the limits of increasing incentives as a recipe for better performance.
    Keywords: incentives; choking under pressure; performance; darts
    JEL: D01 D91
    Date: 2018–12–28
  8. By: Khan, Abhimanyu
    Abstract: I study recurrent strategic interaction between two responsive behavioural rules in generic bi-matrix weakly acyclic games. The two individuals that play the game in a particular period choose their strategy by responding to a sample of strategies used by the co-players in the recent history of play. The response of a player is determined by his behavioural rule. I show that the game reaches a convention whenever the behavioural rule of each player is `weakly responsive' to the manner in which strategies were chosen in the past by the co-players, and stays locked into the convention if the behavioural rules are `mildly responsive'. Furthermore, amongst `mildly responsive' behavioural rules, individuals described by the behavioural rule of `extreme optimism' perform the best in the sense that their most preferred convention is always in the stochastically stable set; under an additional mild restriction that differentiates the behavioural rule of the other player from extreme optimism, the convention referred to above is the unique stochastically stable state.
    Keywords: evolution of conventions; behavioural rules; weakly responsive; mildly responsive; optimism
    JEL: C73
    Date: 2018–12–08
  9. By: Brañas-Garza, Pablo; Cabrales, Antonio; Mateu, Guillermo; Sanchez, Angel; Sutan, Angela
    Abstract: We study experimentally the impact of pre-play social interactions on negotiations. These interactions are often complex. Thus, we attempt to isolate the impact of several of its more common components: conversations, food, and beverages, which could be alcoholic or non-alcoholic. To do this, our subjects take part in a standardized negotiation (complex and simple) under six conditions: without interaction, interaction only, and interactions with water, wine, water and food and wine and food. We find that none of the treatments improve the outcomes over the treatment without interactions. We also study trust and reciprocity in the same context. For all-male groups, we find the same lack of superiority of interaction treatments over no interaction. For all-female groups, some very simple social interactions have a positive impact on trust.
    Keywords: negotiation, trust, business meals, social interactions, alcohol.
    JEL: C91 I18 M11
    Date: 2018–12–25

This nep-cbe issue is ©2019 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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