nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2019‒01‒21
nine papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Discrimination at Young Age: Experimental Evidence from Preschool Children By Parampreet Christopher Bindra; Daniela Glätzle-Rützler; Philipp Lergetporer
  2. Learning about One\' s Self By Le Yaouanq, Yves; Schwardmann, Peter
  3. The Intergenerational Behavioural Consequences of a Socio-Political Upheaval By Booth, Alison L.; Meng, Xin; Fan, Elliott; Zhang, Dandan
  4. How Do Households Allocate Risk? By Christoph Engel; Alexandra Fedorets; Olga Gorelkina
  5. Can we nudge farmers into saving water? Evidence from a randomized experiment By Sylvain Chabé-Ferret; Philippe Le Coent; Arnaud Reynaud; Julie Subervie; Daniel Lepercq
  6. Rethinking Nudge: Not One But Three Concepts * By Philippe Mongin; Mikaël Cozic
  7. Machine Learning and Rule of Law By Chen, Daniel L.
  8. Are economic preferences shaped by the family context? The impact of birth order and siblings’ sex composition on economic preferences By Lena Detlefsen; Andreas Friedl; Katharina Lima de Miranda; Ulrich Schmidt; Matthias Sutter
  9. Fair cake-cutting in practice By Kyropoulou, Maria; Ortega, Josué; Segal-Halevi, Erel

  1. By: Parampreet Christopher Bindra; Daniela Glätzle-Rützler; Philipp Lergetporer
    Abstract: Discrimination is an ubiquitous phenomenon in many societies, but little is known about its origins in childhood. In a framed field experiment, we let 142 three to six-year old preschool children allocate a fixed endowment between an in-group and an out-group receiver in two domains (gender and group affiliation). Discrimination is prevalent in our subjects, since they allocate more than half of their endowment to the in-group. The extent of discrimination does not differ between domains, suggesting that it is a universal, as opposed to a domain-specific, trait. Analyzing age dynamics, we find that discrimination develops with age.
    Keywords: discrimination, children, experiment, fairness
    JEL: C91 C93 D03
    Date: 2018
  2. By: Le Yaouanq, Yves (LMU Munich); Schwardmann, Peter (LMU Munich)
    Abstract: How can naivete about present bias persist despite experience? To answer this question, our experiment investigates participants\' ability to learn from their own behavior. Participants decide how much to work on a real effort task on two predetermined dates. In the week preceding each work date, they state their commitment preferences and predictions of future effort. While we find that participants are present biased and initially naive about their bias, our methodology enables us to establish that they are Bayesian in how they learn from their experience at the first work date. A treatment in which we vary the nature of the task at the second date further shows that learning is unencumbered by a change in environment. Our results suggest that persistent naivete cannot be explained by a fundamental inferential bias. At the same time, we find that participants initially underestimate the information that their experience will provide - a bias that may lead to underinvestment in experimentation and a failure to activate self-regulation mechanisms.
    Keywords: naivete; present bias; learning.;
    JEL: D83 D90
    Date: 2019–01–14
  3. By: Booth, Alison L. (Australian National University); Meng, Xin (Australian National University); Fan, Elliott (National Taiwan University); Zhang, Dandan (Peking University)
    Abstract: Social scientists have long been interested in the effects of social-political upheavals on a society subsequently. A priori, we would expect that, when traumas are brought about by outsiders, within-group behaviour would become more collaborative, as society unites against the common foe. Conversely, we would expect the reverse when the conflict is generated within-group. In our paper we are looking at this second form of upheaval, and our measure of within-group conflict is the 1966-1976 Cultural Revolution (CR) that seriously disrupted many aspects of Chinese society. In particular, we explore how individuals' behavioural preferences are affected by within-group traumatic events experienced by their parents or grandparents. Using data from a laboratory experiment in conjunction with survey data, we find that individuals with parents or grandparents affected by the CR are less trusting, less trustworthy, and less likely to choose to compete than their counterparts whose predecessors were not direct victims of the CR.
    Keywords: preferences, behavioural economics, cultural revolution
    JEL: C91 N4
    Date: 2018–11
  4. By: Christoph Engel; Alexandra Fedorets; Olga Gorelkina
    Abstract: Individuals often have to decide to which degree of risk they want to expose others, or how much risk to accept if their choice has an externality on third parties. One typical application is a household. We run an experiment in the German Socio-Economic Panel with two members from 494 households. Participants have a good estimate of each other’s risk preferences, even if not explicitly informed. They do not simply match this preference when deciding on behalf of the other household member, but shy away from exposing others to risk. We model the situation, and we find four distinct types of individuals, and two distinct types of households.
    Keywords: risk preference, household, reticence to expose others to risk, trade-off between individual and foreign risk preference
    JEL: C45 D13 D81 D91
    Date: 2018
  5. By: Sylvain Chabé-Ferret (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Philippe Le Coent (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Arnaud Reynaud (TSE - Toulouse School of Economics - Toulouse School of Economics); Julie Subervie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Daniel Lepercq (CACG - Compagnie d'aménagement des côteaux de Gascogne - Compagnie d'aménagement des côteaux de Gascogne - CACG)
    Abstract: Improving water efficiency is a growing challenge for the Common Agricultural Policy. In this article, we test whether social comparison nudges can promote water-saving behavior among farmers. We report on a pilot Randomized Controlled Trial, in which information on individual and group water consumption were sent every week to farmers equipped with smartmeters. We do not detect an effect of nudges on average water consumption. We however find that the nudge decreases water consumption at the top of the distribution while it increases consumption at the bottom. This study highlights the potential of nudges as an agricultural policy tool.
    Keywords: behavioral economics,government policy,irrigation water use,nudges
    Date: 2018–12–07
  6. By: Philippe Mongin (CNRS - Centre National de la Recherche Scientifique); Mikaël Cozic (LIS - Lettres, Idées, Savoir - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, IHPST - Institut d'Histoire et de Philosophie des Sciences et des Techniques - UP1 - Université Panthéon-Sorbonne - DEC - Département d'Etudes Cognitives - ENS Paris - ENS Paris - École normale supérieure - Paris - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Nudge is a concept of policy intervention that originates in Thaler and Sunstein's (2008) popular eponymous book. Following their own hints, we distinguish three properties of nudge interventions: they redirect individual choices by only slightly altering choice conditions (here nudge 1), they use rationality failures instrumentally (here nudge 2), and they alleviate the unfavourable effects of these failures (here nudge 3). We explore each property in semantic detail and show that no entailment relation holds between them. This calls into question the theoretical unity of nudge, as intended by Thaler and Sunstein and most followers. We eventually recommend pursuing each property separately, both in policy research and at the foundational level. We particularly emphasize the need of reconsidering the respective roles of decision theory and behavioural economics to delineate nudge 2 correctly. The paper differs from most of the literature in focusing on the definitional rather than the normative problems of nudge.
    Keywords: behavioural economics,Kahneman and Tversky,Thaler and Sunstein,policy analysis,liberal paternalism,nudge,rationality,decision biases,decision theory
    Date: 2018
  7. By: Chen, Daniel L.
    Abstract: Predictive judicial analytics holds the promise of increasing the fairness of law. Much empirical work observes inconsistencies in judicial behavior. By predicting judicial decisions—with more or less accuracy depending on judicial attributes or case characteristics—machine learning offers an approach to detecting when judges most likely to allow extralegal biases to influence their decision making. In particular, low predictive accuracy may identify cases of judicial “indifference,” where case characteristics (interacting with judicial attributes) do no strongly dispose a judge in favor of one or another outcome. In such cases, biases may hold greater sway, implicating the fairness of the legal system.
    Date: 2018–12
  8. By: Lena Detlefsen (University of Kiel and Kiel Institute for the World Economy); Andreas Friedl (Friedrich-Alexander University Erlangen-Nürnberg); Katharina Lima de Miranda (Kiel Institute for the World Economy); Ulrich Schmidt (University of Kiel, University of Johannesburg and Kiel Institute for the World Economy); Matthias Sutter (Max Planck Institute for Research on Collective Goods Bonn and University of Cologne)
    Abstract: The formation of economic preferences in childhood and adolescence has long-term consequences for life-time outcomes. We study in an experiment with 525 teenagers how both birth order and siblings’ sex composition affect risk, time and social preferences. We find that second born children are typically less patient, less risk averse, and more trusting. However, siblings’ sex composition interacts importantly with birth order effects. Second born children are more risk taking only with same-sex siblings. For trust and trustworthiness, birth order effects are larger with mixed-sex siblings than in the single-sex case. Only for patience, siblings’ sex composition does not matter.
    Date: 2018–11
  9. By: Kyropoulou, Maria; Ortega, Josué; Segal-Halevi, Erel
    Abstract: Using a lab experiment, we investigate the real-life performance of envy-free and proportional cake-cutting procedures with respect to fairness and preference manipulation. We nd that envy-free procedures, in particular Selfridge-Conway, are fairer and also are perceived as fairer than their proportional counterparts, despite the fact that agents very often manipulate them. Our results support the practical use of the celebrated Selfridge-Conway procedure, and more generally, of envy- free cake-cutting mechanisms. We also nd that subjects learn their opponents' preferences after repeated interaction and use this knowledge to improve their allocated share of the cake. Learning reduces truth-telling behavior, but also reduces envy.
    Keywords: cake-cutting,Selfridge-Conway,cut-and-choose,envy,perceived fairness,preference manipulation,experimentation and learning
    JEL: C71 C91 D63
    Date: 2018

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