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on Cognitive and Behavioural Economics |
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Issue of 2019‒04‒08
eight papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods); Luigi Mittone (University of Trento); Azzurra Morreale (LUT University, Finland) |
| Abstract: | Arguably, for many citizens the perceived expected disutility from sanctions is smaller than the monetary gain from tax evasion. Nevertheless most people pay their taxes most of the time. In a lab experiment, we show that the willingness to pay taxes even absent enforcement is indeed pronounced. Yet voluntary compliance is reduced if participants learn that income is heterogeneous. The effect is driven by participants with the lowest income. The reduction obtains irrespective of the tax regime. If the tax is proportional to income, or progressive, participants become more skeptical about the willingness of participants with high income to comply. |
| Keywords: | tax evasion, tax morale, heterogeneity, income inequality, lump sum tax, proportional tax, progressive tax, beliefs, path model |
| JEL: | C30 C91 D01 D02 D31 D63 D91 H26 K34 K42 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2019_02&r=all |
| By: | Büchel, Berno; Klößner, Stefan; Lochmüller, Martin; Rauhut, Heiko |
| Abstract: | We investigate how the selection process of a leader affects team performance with respect to social learning. We use a lab experiment in which an incentivized guessing task is repeated in a star network with the leader at the center. Leader selection is either based on competence, on self-confidence, or made at random. Teams with random leaders do not underperform compared to competent leaders, and they even outperform teams whose leader is selected based on self-confidence. The reason is that random leaders are better able to use the knowledge within the team. We can show that it is the declaration of the selection procedure which makes non-random leaders overly influential. We set up a horse race between several rational and naïve models of social learning to investigate the micro-level mechanisms. We find that overconfidence and conservatism contribute to the fact that overly influential leaders mislead their team. |
| Keywords: | Research Methods/ Statistical Methods |
| Date: | 2018–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemth:268729&r=all |
| By: | Niu, Xiaofei; Li, Jianbiao |
| Abstract: | Time constraint is a central aspect of financial decision making. This paper experimentally examines the effect of time constraint on the disposition effect, which refers to the empirical fact that investors have a higher propensity to sell stocks with capital gains compared to stocks with capital losses. We distinguish time pressure from time constraint by implementing three treatments: no time constraint (NTC), 20 seconds time constraint (20TC), and 10 seconds time constraint (10TC). The experimental results show that time constraint affects the disposition effect at some conditions, i.e. the 10TC treatment, in which subjects perceive more time pressure, significantly reduces the disposition effect; this treatment effect, however, vanishes in 20TC treatment, where feelings of stress do not differ from the NTC treatment. Self-control is one of the psychological mechanisms that explains why time pressure reduces the disposition effect. |
| Keywords: | time pressure,disposition effect |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:194618&r=all |
| By: | Bose, Neha (University of Warwick); Sgroi, Daniel (University of Warwick, CAGE and IZA) |
| Abstract: | In a laboratory experiment, 338 participants were asked to communicate in pairs and then play two games with their partners: the 11-20 money request game (a tool for assessing level-k reasoning) and a public goods game. The communication occurred prior to any knowledge of what was to follow but played an important role in allowing them to develop theories or mental models of their partners (“theory of mind”) which proved to be crucial explanatory factors for decision-making. We examine the players’ beliefs about the personality and intelligence of their partner, how they play in the games and analysed the language used during communication. The results indicate that beliefs about partner’s type is biased by own-type. In particular, extraverts, characterised by positive affect, projected their positivity onto their partners. The level-k strategy chosen in the 11-20 game increased with the perceived similarity between players and in the public goods game, players cooperated more when they believed their partners to be extraverted. An analysis of the text used during communication explains how it was possible for participants to draw inferences about other’s type: for instance, use of more words and more dominant words were associated with being an extravert. |
| Keywords: | theory of mind ; cheap talk ; communication ; level-k reasoning ; public goods game ; cooperation ; extraversion ; perceived similarity ; self-projection bias ; laboratory experiment ; text analysis. |
| JEL: | D91 D83 C92 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1191&r=all |
| By: | Aydogan, Ilke; Berger, Loϊc; Bosetti, Valentina; Liu, Ning |
| Abstract: | We experimentally explore decision-making under uncertainty using a framework that decomposes uncertainty into three distinct layers: (1) physical uncertainty, entailing inherent randomness within a given probability model, (2) model uncertainty, entailing subjective uncertainty about the probability model to be used and (3) model misspecification, entailing uncertainty about the presence of the true probability model among the set of models considered. Using a new experimental design, we measure individual attitudes towards these different layers of uncertainty and study the distinct role of each of them in characterizing ambiguity attitudes. In addition to providing new insights into the underlying processes behind ambiguity aversion -failure to reduce compound probabilities or distinct attitudes towards unknown probabilities- our study provides the first empirical evidence for the intermediate role of model misspecification between model uncertainty and Ellsberg in decision-making under uncertainty. |
| Keywords: | Risk and Uncertainty |
| Date: | 2018–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemth:274852&r=all |
| By: | Larry G. Epstein; Yoram Halevy |
| Abstract: | Decisions under uncertainty are often made with information that is difficult to interpret because multiple interpretations are possible. Individuals may perceive and handle uncertainty about interpretation differently and in ways that are not directly observable to a modeler. This paper identifies and experimentally examines behavior that can be interpreted as reflecting an individual's attitude towards such uncertainty. |
| Keywords: | Ambiguity, updating, information, experiment |
| JEL: | D81 D91 C91 |
| Date: | 2019–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-634&r=all |
| By: | Mourelatos, Evangelos; Giannakopoulos, Nicholas; Tzagarakis, Manolis |
| Abstract: | In this paper we investigate the impact of non-cognitive skills on the quality of task-specific outcomes by conducting a quasi-experiment on a well-known online crowdsourcing platform. We show that a worker’s performance varies with personality traits, gender, human capital, crowdsourcing experience and work effort. Regarding the effects of non-cognitive skills, we find that workers’ performance in online microtasks is positively related to extraversion and agreeableness. The positive impact of extroverts is also revealed when performance is adjusted for task completion time. These findings provide implications regarding the integration of selection mechanisms in online labour matching platforms aiming in uncovering microworkers soft skills to improve performance and consequently the allocation of resources in online microtasks. |
| Keywords: | Crowdsourcing,online labour,quality of work,cognitive abilities,personality traits,workers |
| JEL: | O33 J40 J24 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:338&r=all |
| By: | Anujit Chakraborty; Yoram Halevy; Kota Saito |
| Abstract: | The paper establishes a tight relation between non-standard behaviors in the domains of risk and time, by considering a decision maker with non-expected utility preferences who believes that only present consumption is certain while any future consumption is uncertain. We provide the first complete characterizations of the two-way relations between the certainty effect and present biased temporal behavior, and between the common ratio effect and temporal reversals related to the common difference effect. |
| Keywords: | time consistency, hyperbolic discounting, non-expected utility, present bias, implicit risk. |
| JEL: | D01 D81 D91 |
| Date: | 2019–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-633&r=all |