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on Cognitive and Behavioural Economics |
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Issue of 2019‒04‒01
eight papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Frederik Schwerter; Florian Zimmermann |
| Abstract: | Social interactions pervade daily life and thereby create an abundance of social experiences. Such personal experiences likely shape what we believe and who we are. In this paper, we ask if and how personal experiences from social interactions determine individuals’ inclination to trust others? We implement an experimental environment that allows us to manipulate prior social experiences—either being paid or not being paid by a peer subject for a task—and afterwards measure participant’s willingness to trust others. We contrast this situation with a control condition where we keep all aspects of the prior experiences identical, except that we remove the social dimension. Our key finding is that after positive social experiences, subjects’ willingness to trust is substantially higher relative to subjects who made negative social experiences. No such effect is obtained in the control condition where we removed the social aspect of experiences. Findings from a difference-in-difference analysis confirm this pattern. Our results cannot be explained by rational learning, income effects, pay or social comparison related mood, disappointment aversion and expectations-based or social reference points. Delving into the underlying mechanisms, we provide evidence that non-standard belief patterns are an important driver of experience effects. |
| Keywords: | determinants of trust, experiences, beliefs, non-standard learning, experiments |
| JEL: | C91 D03 D81 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7545&r=all |
| By: | Edward Cartwright; Abhijit Ramalingam |
| Abstract: | We disentangle the effects of choice (give vs. take) and externality (positive vs. negative) framing of decisions in isomorphic and payoff-equivalent experimental public good games. We find that, at the aggregate level, neither frame affects group contributions. At the individual level, the Take choice frame leads to greater free-riding, and also to somewhat higher contributions, i.e., to more extreme contribution behaviour. Key Words: isomorphic; public goods; experiment; cooperation; choice frame; externality frame |
| JEL: | C72 C91 C92 D02 H41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:19-07&r=all |
| By: | Isamaël Rafaï (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique); Sébastien Duchêne (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); Eric Guerci (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique); Ariane Lambert-Mogiliansky (PSE - Paris School of Economics); Fabien Mathy (BCL, équipe Langage et Cognition - BCL - Bases, Corpus, Langage (UMR 7320 - UNS / CNRS) - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | In this paper, we will put forward an original experiment to reveal empirical "anomalies" in the process of acquisition, elaboration and retrieval of information in the context of reading economic related content. Our results support the existence of the memory dual process suggested in the Fuzzy Trace Theory: acquisition of information leads to the formation of a gist representation which may be incompatible with the exact verbatim information stored in memory. We give to subjects complex and complete information and evaluate their cognitive ability. To answer some specific questions, individuals used this gist representation rather than processing verbatim information appropriately. |
| Keywords: | Fuzzy Trace Theory,memory,Bounded rationality,Dual Process,Cognitive reflection test |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01954930&r=all |
| 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: | nudges,behavioral economics,government policy,irrigation water use |
| Date: | 2018–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-01947420&r=all |
| By: | Alison Booth; Xin Meng; Elliott Fan; Dandan Zhang |
| 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: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:074&r=all |
| By: | James Andreoni; Amalia Di Girolamo; John List; Claire Mackevicius; Anya Samek |
| Abstract: | We conduct experiments eliciting risk preferences with over 1,400 children and adolescents aged 3-15 years old. We complement our data with an assessment of cognitive and executive function skills. First, we find that adolescent girls display significantly greater risk aversion than adolescent boys. This pattern is not observed among young children, suggesting that the risk gap in risk preferences emerges in early adolescence. Second, we find that at all ages in our study, cognitive skills (specifically math ability) are positively associated with risk taking. Executive functions among children, and soft skills among adolescents, are negatively associated with risk taking. Third, we find that greater risk-tolerance is associated with higher likelihood of disciplinary referrals, which provides evidence that our task is equipped to measure a relevant behavioral outcome. For academics, our research provides a deeper understanding of the developmental origins of risk preferences and highlights the important role of cognitive and executive function skills to better understand the association between risk preferences and cognitive abilities over the studied age range. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00668&r=all |
| By: | Thomas Dohmen; Simone Quercia; Jana Willrodt |
| Abstract: | We show that the disposition to focus on favorable or unfavorable outcomes of risky situations affects willingness to take risk as measured by the general risk question. We demonstrate that this disposition, which we call risk conception, is strongly associated with optimism, a stable facet of personality, and that it predicts real-life risk taking. The general risk question captures this disposition alongside pure risk preference. This likely contributes to the predictive power of the general risk question across domains. Our results also rationalize why risk taking is related to optimism. |
| Keywords: | Risk taking behavior,optimism,preference measure,risk conception |
| JEL: | D91 C91 D81 D01 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1026&r=all |
| By: | Hagenhoff, Tim; Lustenhouwer, Joep |
| Abstract: | We analyze differences in consumption and wealth that arise because of different degrees of rationality of households. In particular, we use a standard New Keynesian model and let a certain fraction of households be fully rational while the other fraction possesses less cognitive ability. We identify the rationality bias of boundedly rational agents, defined as a deviation from the fully rational benchmark, as the driver of consumption and wealth heterogeneity. It turns out that the rationality bias can be decomposed into three individual components: the consumption expectation bias, the real interest rate bias and the preference shock expectation bias. We show that for certain specifications of monetary policy the rationality bias can be eliminated because its individual components exactly offset each other although they are individually non-zero. However, it might not be desirable from a welfare perspective to eliminate the rationality bias as this comes along with high inflation volatility. |
| Keywords: | heterogeneous expectations,bounded rationality,consumption and wealth heterogeneity,monetary policy |
| JEL: | E32 E52 D84 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bamber:144&r=all |