nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2019‒03‒18
five papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Does revealing personality data affect prosocial behavior? By Michalis Drouvelis; Nikolaos Georgantzis
  2. A Tale of Two Cities: An Experiment on Inequality and Preferences By M. Bigoni; S. Bortolotti; V. Rattini
  3. Everyday econometricians: Selection neglect and overoptimism when learning from others By Barron, Kai; Huck, Steffen; Jehiel, Philippe
  4. Social Pressure or Rational Reactions to Incentives? A Historical Analysis of Reasons for Referee Bias in the Spanish Football By Tena Horrillo, Juan de Dios; Reade, J. James; Cabras, Stefano
  5. Limited Cognitive Ability and Selective Information Processing By Leung, B. T. K.

  1. By: Michalis Drouvelis; Nikolaos Georgantzis
    Abstract: Many modern organisations collect data on individuals’ personality traits as part of their human resource selection processes. We test experimentally whether revealing information on personality data impacts on pro-social behaviour as measured in a one-shot modified dictator game and a public goods game. Our focus is on the personality trait of agreeableness which has been shown to be a significant determinant of pro-sociality. We provide new evidence that revealing personality information for disagreeable individuals has detrimental effects on their pro-social behaviour as compared to the baseline no-information benchmark. This is not the case, however, for agreeable individuals when they are matched with agreeable individuals. Agreeable individuals become less pro-social when matched with disagreeable individuals and are aware of this. Our results suggest that information cues about personality significantly affect economic behaviour and have implications for employees’ personality assessments as part of standard hiring processes.
    Keywords: personality, social preferences, inequity aversion, cooperation, laboratory experiment
    JEL: C91 D70 H41
    Date: 2019
  2. By: M. Bigoni; S. Bortolotti; V. Rattini
    Abstract: We study how differences in socio-economic background correlate with preferences and beliefs, in a sample of college students born in a mid-sized Italian city. Our findings indicate that participants living in an area characterized by a high socio-economic environment tend to trust more and are more inclined to reciprocate higher levels of trust, as compared to those coming from less wealthy neighborhoods. This behavioral difference is, at least in part, driven by heterogeneities in beliefs: subjects from the most affluent part of the city have more optimistic expectations on their counterpart's trustworthiness than those living in a lower socio-economic environment. By contrast, no significant differences emerge in other preferences: generosity, risk-attitudes, and time preferences. Finally, we do not find any systematic evidence of out-group discrimination based on neighborhood identity.
    JEL: C90 D31 D63 R23
    Date: 2019–03
  3. By: Barron, Kai; Huck, Steffen; Jehiel, Philippe
    Abstract: In this paper, we design an investment game which allows us to study the influence of selection when learning from others. Using the theoretical study of selection neglect in Jehiel (2018) as a guide, we test (i) for the presence of selection neglect in this investment context, and (ii) some comparative static predictions of the model. We find strong evidence for selection neglect—even though subjects are fully informed about the data generating process. As theoretically predicted, the degree of bias due to selection neglect increases when other decision makers become more informed, or become more rational. It decreases when signals are correlated.
    Keywords: selection neglect,beliefs,overconfidence,experiment,survivorship bias,bounded rationality
    JEL: C11 C90 D80 D83
    Date: 2019
  4. By: Tena Horrillo, Juan de Dios; Reade, J. James; Cabras, Stefano
    Abstract: A relevant question in social science is whether cognitive bias can be instigated by social pressure or is it just a rational reaction to incentives in place. Sport, and association football in particular, offers settings in which to gain insights into this question. In this paper we estimate the determinants of the length of time between referee appointments in Spanish soccer as a function of referee decisions in favour of the home and away team in the most recent match by means of a deep-learning model. This approach allows us to capture all interactions among a high-dimensional set of variables without the necessity of specifying them beforehand. Furthermore, deep-learning models are nowadays the state of the art among the predicting models which are needed and here used for estimating effects of a cause. We do not find strong evidence of an incentive scheme that counteracts well-known home referee biases. Our results also suggest that referees are incentivised to deliver a moderate amount of surprise in the outcome of the game what is consistent with the objective function of consumers and tournament organisers.
    Keywords: Sport; Social pressure; Referee bias; Deep-learning model; Causal analysis
    Date: 2019–03
  5. By: Leung, B. T. K.
    Abstract: This paper studies the information processing behavior of a decision maker (DM) who can only process a subset of all the information he receives: before taking an action, the DM receives sequentially a number of signals and decides whether to process or ignore each of them as it is received. The model generates an information processing behavior consistent with that documented in the psychological literature: first, the DM chooses to process signals that are strong; second, his processing strategy exhibits confirmation bias if he has a strong prior belief; third, he tends to process signals that suggest favorable outcomes (wishful thinking). As an application I analyze how the Internet and the induced change in information availability affects the processing behavior of the DM. I show that providing more/better information to the DM could strengthen his confirming bias.
    Keywords: limited ability, information overload, information avoidance, confirmation bias, wishful thinking, polarization
    JEL: D83 D90
    Date: 2018–12–06

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