nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2019‒02‒25
seven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. On Self-Serving Strategic Beliefs By Nadja R. Ging-Jehli; Florian H. Schneider; Roberto A. Weber
  2. Unethical Behavior and Group Identity in Contests By Benistant, Julien; Villeval, Marie Claire
  3. It's not my Fault! Self-Confidence and Experimentation By Nina Hestermann; Yves Le Yaouanq
  4. I Care What You Think: Social Image Concerns and the Strategic Revelation of Past Pro-Social Behavior By Ferdinand A. von Siemens
  5. Trust, Ethnic Diversity, and Personal Contact: A Field Experiment By Henning Finseraas; Torbjørn Hanson; Åshild A. Johnsen; Andreas Kotsadam; Gaute Torsvik
  6. Nudging businesses to pay their taxes By Sinning, Mathias; Fels, Katja M.
  7. Behavioral Players in a Game By Suehyun Kwon

  1. By: Nadja R. Ging-Jehli; Florian H. Schneider; Roberto A. Weber
    Abstract: We experimentally study settings where an individual may have an incentive to adopt negative beliefs about another’s intentions in order to justify egoistic behavior. Our first study uses a game in which a player can take money from an opponent in order to prevent the opponent from subsequently causing harm. We hypothesize that players will justify taking by engaging in “strategic cynicism,” convincing themselves of the opponent’s ill intentions. We elicit incentivized beliefs both from players with such an incentive and from neutral third parties with no incentive to bias their beliefs. We find no difference between the two sets of beliefs, suggesting that people do not negatively bias their beliefs about a strategic opponent even when they have an incentive to do so. This result contrasts with Di Tella, et al. (2015), who argue that they provide evidence of strategic cynicism. We reconcile the discrepancy by using Di Tella, et al.’s, data, a simple model of strategic belief manipulation and a novel experiment in which we replicate Di Tella, et al.’s, experiment and also elicit the beliefs of neutral third parties. Across three experimental datasets, the results provide no evidence of negatively biased beliefs about others’ intentions. However, Di Tella, et al.’s, results and our novel data indicate that those with a greater incentive to view others’ intentions negatively exhibit relatively less positive beliefs than those without such incentives.
    Keywords: motivated beliefs, strategic cynicism, bias, experiment
    JEL: C72 D83 C92
    Date: 2019
  2. By: Benistant, Julien (GATE, University of Lyon); Villeval, Marie Claire (CNRS, GATE)
    Abstract: Using a real-effort experiment, we study whether group identity affects unethical behavior in a contest game. We vary whether minimal group identity is induced or not, whether individuals have to report their own outcome or the outcome of their competitor, and whether pairs of competitors share the same group identity or not. We show that individuals misreport in the same proportion and to the same extent by inflating their outcome or by decreasing their opponent's outcome, except when any possible scrutiny by the experimenter is removed. Regardless of the possibility of scrutiny by the experimenter, misreporting is affected neither by the competitor's group identity nor by the individual's beliefs about others' misreporting behavior. This suggests that in competitive settings, unethical behavior is mainly driven by an unconditional desire to win.
    Keywords: lying, sabotage, group identity, contests, experiment
    JEL: C92 M54 D63
    Date: 2019–01
  3. By: Nina Hestermann; Yves Le Yaouanq
    Abstract: We study the inference and experimentation problem of an agent in a situation where the outcomes depend on the individual’s intrinsic ability and on an external variable. We analyze the mistakes made by decision-makers who hold inaccurate prior beliefs about their ability. Overconfident individuals take too much credit for their successes and excessively blame external factors if they fail. They are too easily dissatisfied with their environment, which leads them to experiment in variable environments and revise their self-confidence over time. In contrast, underconfident decision-makers might be trapped in low-quality environments and incur perpetual utility losses.
    Keywords: learning, experimentation, overconfidence, attribution bias
    JEL: D83
    Date: 2019
  4. By: Ferdinand A. von Siemens
    Abstract: This article studies whether people want to control which information on their own past pro-social behavior is revealed to other people. Participants in an experiment are assigned a color which depends on their own past pro-sociality. They can then spend money to increase or decrease the probability with which their color is revealed to another participant. The data show that participants are more likely to reveal colors that have a more favorable informational content. This pattern is not found in a control treatment in which colors are randomly assigned and thus have no informational content. Regression analysis confirms these findings, also when controlling for the initial pro-social decision. These results complement the existing empirical evidence, and suggests that people strategically manipulate the pro-social impression they make on other people, even though a favorable reputation has no immediate material benefits.
    Keywords: social signaling, trust, altruism
    JEL: C90 D01 D80
    Date: 2019
  5. By: Henning Finseraas; Torbjørn Hanson; Åshild A. Johnsen; Andreas Kotsadam; Gaute Torsvik
    Abstract: We study how close personal contact with minorities affects in-group and out-group trust in a field experiment in the armed forces. Soldiers are randomly assigned to rooms with or without ethnic minorities. At the end of the recruit period, we measure trust by using a trust game. Results indicate that close personal contact with minorities increases trust towards a generic immigrant. We replicate the result that individuals coming from more ethnically diverse areas trust minorities less, but random assignment to interact with minority soldiers removes this negative correlation. We conclude that social integration involving personal contact can reduce negative effects of ethnic diversity on trust.
    Date: 2019
  6. By: Sinning, Mathias; Fels, Katja M.
    Abstract: Tax noncompliance harms both social cohesion and public welfare. In the US alone, tax underpayment averaged $39 billion per year from 2008 to 2010. How can tax authorities collect outstanding payments more efficiently? Novel research by RWI in cooperation with the Australian National University provides new insights: based on three natural field experiments, the researchers show that a simplified language and reminders increase tax compliance by corporate taxpayers. Early reminders are especially attractive from a tax collector's perspective.
    Date: 2019
  7. By: Suehyun Kwon
    Abstract: This paper points out issues with having behavioral players together with fully rational players in a game. One example of behavioral players is naive or sophisticated players; one can study higher-order beliefs when sophistication is the first-order belief, but the paper also considers alternative ways of modelling the type space and non-Bayesian updating. The paper shows that players must have heterogeneous priors and this type of heterogeneous priors cannot be justified by acquiring private information from the common prior. Furthermore, equilibrium definitions need to be modified for games with behavioral players.
    Keywords: naivete, misspecified beliefs, heterogeneous priors, higher-order beliefs, equilibrium definition, Harsanyi doctrine
    Date: 2019

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