nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2019‒03‒04
eight papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Strategically delusional By Alice Solda; Changxia Ke; Lionel Page; William von Hippel
  2. Birds of a feather stick together: How overlapping group affiliations shape altruistic behavior By Bauer, Kevin
  3. We Are All Behavioral, More or Less: Measuring and Using Consumer-Level Behavioral Sufficient Statistics By Stango, Victor; Zinman, Jonathan
  4. Toward a cognitive science of markets: Economic agents as sense-makers By Johnson, Samuel G. B.
  5. Learning About One\'s Self By Le Yaouanq, Yves; Schwardmann, Peter
  6. Focality is intuitive - Experimental evidence on the effects of time pressure in coordination games By Sonntag, Axel; Poulsen, Anders
  7. Promoting socially desirable behaviors: experimental comparison of the procedures of persuasion and commitment. By Cécile Bazart; Mathieu Lefebvre; Julie Rosaz

  1. By: Alice Solda; Changxia Ke; Lionel Page; William von Hippel
    Abstract: We aim to test the hypothesis that overconfidence arises as a strategy to influence others in social interactions. We design an experiment in which participants are incentivised either to form accurate beliefs about their performance at a test, or to convince a group of other participants that they performed well. We also vary participants’ ability to gather information about their performance. Our results provide, the different empirical links of von Hippel and Trivers’ (2011) theory of strategic overconfidence. First, we find that participants are more likely to overestimate their performance when they anticipate that they will try to persuade others. Second, when offered the possibility to gather information about their performance, they bias their information search in a manner conducive to receiving more positive feedback. Third, the increase in confidence generated by this motivated reasoning has a positive effect on their persuasiveness.
    Keywords: Overconfidence, motivated cognition, self-deception, persuasion, information sampling, experiment.
    JEL: C91 D03 D83
    Date: 2019–02–21
  2. By: Bauer, Kevin
    Abstract: In the current paper, I deploy a novel laboratory experiment to answer the following questions: Does people’s other-regarding behavior change with the number of group memberships they have in common with others? Can uncertainty about others’ group memberships weaken in-group favoritism and lead to more selfish behavior? There are two main findings. First, on average pro-social concerns increase monotonically with the number of joint group affiliations. On the individual level, however, I document a considerable heterogeneity. Second, in situations where participants have only in- complete information on others’ group affiliations, they do not behave more selfishly. It seems as if the awareness of one joint group affiliation in combination with ignorance about the nature of other group memberships is sufficient to elicit maximum other-regarding concerns. My results highlight the importance of carefully navigating workers perceptions on complex and overlapping group affiliations as a task of diversity management within organizations where a high degree of social diversity characterizes the workforce.
    Keywords: Social groups, Behavioral Heterogeneity, Moral Wiggle Room
    JEL: C91 C92 D03 D83
    Date: 2019–01–09
  3. By: Stango, Victor (University of California, Davis); Zinman, Jonathan (Dartmouth College)
    Abstract: Can a behavioral sufficient statistic empirically capture cross-consumer variation in behavioral tendencies and help identify whether behavioral biases, taken together, are linked to material consumer welfare losses? Our answer is yes. We construct simple consumer-level behavioral sufficient statistics—“B-counts”—by eliciting seventeen potential sources of behavioral biases per person, in a nationally representative panel, in two separate rounds nearly three years apart. B-counts aggregate information on behavioral biases within-person. Nearly all consumers exhibit multiple biases, in patterns assumed by behavioral sufficient statistic models (a la Chetty), and with substantial variation across people. B-counts are stable within-consumer over time, and that stability helps to address measurement error when using B-counts to model the relationship between biases, decision utility, and experienced utility. Conditional on classical inputs—risk aversion and patience, life-cycle factors and other demographics, cognitive and non-cognitive skills, and financial resources—B-counts strongly negatively correlate with both objective and subjective aspects of experienced utility. The results hold in much lower-dimensional models employing “Sparsity B-counts” based on bias subsets (a la Gabaix) and/or fewer covariates, illuminating lower-cost ways to use behavioral sufficient statistics to help capture the combined influence of multiple behavioral biases for a wide range of research questions and applications.
    Keywords: behavioral bias; consumer spending
    JEL: C83 D1 D6 D9
    Date: 2019–02–22
  4. By: Johnson, Samuel G. B.
    Abstract: Behavioral economics characterizes decision-makers using psychologically-informed models. Cognitive science produces psychologically-informed models. Why don't these disciplines talk more? Here, the author presents several arguments for why cognitive science should inform behavioral economics - it characterizes internal psychological states, builds a richer conception of human nature, pays equal attention to cognition's successes and failures, embraces multidisciplinary insights, and avoids blind spots produced by behavioral economics' intellectual lineage. The author illustrates these principles using the cognitive science of sense-making - how humans understand information - including mental tools such as heuristics, stories, and theories. The science of mind can produce new insights to enrich economics.
    Keywords: cognitive science,behavioral economics,experimental economics,behavioral finance,economics methodology,information processing,decision-making under uncertainty
    JEL: A12 B4 D01 D11 D7 D8 D9
    Date: 2019
  5. 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: 2019–02–23
  6. By: Sonntag, Axel; Poulsen, Anders
    Abstract: We experimentally examine the effects of varying time pressure in a coordination game with a label salient focal equilibrium. We consider both a pure coordination game (payoff symmetry) and a battle of the sexes game with conflict of interest (payoff asymmetry). In symmetric games, there are no effects of time pressure, since the label-salient outcome is highly focal regardless of how much time subjects have to decide. In asymmetric games, less time results in greater focality of the the label-salient action, and it becomes significantly more likely that any coordination is on the focal outcome.
    Keywords: coordination game; focal point; time pressure; response times; social heuristics hypothesis; experiment
    JEL: C70 C72 C92
    Date: 2019–02
  7. By: Cécile Bazart; Mathieu Lefebvre; Julie Rosaz
    Abstract: In a series of experiments, we test the relative efficiency of persuasion and commitment schemes to increase and sustain contribution levels in a Voluntary Contribution Game. The design allows to compare a baseline consisting of a repeated public good game to, respectively, four manipulation treatments relying on: an information strategy, a low commitment strategy, a high commitment strategy and a promise strategy. We confirm the advantages of psychologically orientated policies as they increase the overall level of contribution and for some, that is commitment and promises, question the decreasing trend traditionally observed in long term contributions to public goods.
    Keywords: Experiment, Persuasion, Commitment, Voluntary Contribution Mechanism.
    JEL: C91 D91 H41
    Date: 2019
  8. By: Irina S. Prusova (National Research University Higher School of Economics); Olga A. Gulevich (National Research University Higher School of Economics)
    Abstract: Psychological studies show the effect of mortality salience (MS) on attitudes and behavioral patterns in different spheres of social life, particularly, in intergroup relationships. This study examines the influence of MS on attitudes toward national outgroups. In line with terror management theory (TMT), previous studies indicate a contradictory impact of death-related thoughts. Reminders of death enhance unfavorable attitudes toward all national outgroups, however, MS reinforces the negative attitudes only toward unfriendly countries or toward those perceived as threatening. To shed light on the influence of MS, we conducted two experimental studies that were differentiated by MS manipulation and the specifics of the outgroups. In Study 1 we actualized the reminders of death through military news, whereas in Study 2 by the presentation of terrorism news (close and distant). In Study 1 (N = 180) we analyzed the impact of MS on attitudes toward Ukraine, Belarus, and Estonia. The results showed that MS mostly reinforced the unfavorable attitudes toward ‘unfriendly’ and ‘neutral’ countries. Study 2 (N = 242) focused on MS and attitudes toward Ukraine, Belarus, the USA, and China. The results indicated that MS enhanced negative attitudes toward Ukraine as an ‘unfriendly’ country. However, the close or distant terrorism-related content did not illustrate the specific influence on attitudes toward national outgroups
    Keywords: Terror Management Theory, mortality salience, attitudes
    JEL: Z
    Date: 2019

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