nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2019‒06‒17
seven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Collective intertemporal decisions and heterogeneity in groups By Daniela Glaetzle-Ruetzler; Philipp Lergetporer; Matthias Sutter
  2. Emotions of Altruism, Envy and Guilt: Experimental Evidence By Moreno, Alejandro; Viianto, Lari; García, Daniel
  3. It’s Time to Cheat! By Alessandro Bucciol; Simona Cicognani; Natalia Montinari
  4. Learning to cooperate in the shadow of the law By Roberto Galbiati; Emeric Henry; Nicolas Jacquemet
  5. Nudging responses to marketing emails: Evidence from London Fireworks Campaign By Alice Gimblett; Daryna Grechyna
  6. Are risk preferences stable ? A field experiment in Congo Basin countries. By Marielle Brunette; Jonas Ngouhouo-Poufoun
  7. Bounded Rationality, Monetary Policy, and Macroeconomic Stability By Francisco Ilabaca; Greta Meggiorini; Fabio Milani

  1. By: Daniela Glaetzle-Ruetzler; Philipp Lergetporer; Matthias Sutter
    Abstract: Many important intertemporal decisions, such as investments of firms or households, are made by groups rather than individuals. Little is known what happens to such collective deci- sions when group members have different incentives for waiting, because the economics liter- ature on group decision making has, so far, assumed homogeneity within groups. In a lab ex- periment, we study the causal effect of group members’ heterogeneous payoffs from waiting on intertemporal choices. We find that three-person groups behave more patiently than indi- viduals and that this effect is driven by the presence of at least one group member with a high payoff from waiting. We present group chat content, survey data, and additional treatments to uncover the mechanism through which heterogeneity in groups increases patience.
    Keywords: patience, time preferences, group decisions, payoff heterogeneity, experiment
    JEL: C91 C92 D03 D90
    Date: 2019–10
  2. By: Moreno, Alejandro; Viianto, Lari; García, Daniel
    Abstract: We run an economic experiment in order to find out the preferences of altruism, envy, and guilt at individual level. We extend Andreoni and Miller’s (2002) series of Dictator Experiments and Fisman et al.’s (2007) graphical experiment in order to have additional and more precise data at individual level. We run 55 graphical dictator games including some with a positive relation between the money the Dictator and the Receiver obtain, in order to estimate individual preferences for envy and guilt. Our program is interactive, as it looks for the regions where individuals´ emotions change from altruist to envy, and altruism to guilt, and changes the form of the budget sets. We find that most individuals show the emotion of altruism when facing other individuals that have similar income as themselves. However, some individuals show the emotion of envy when facing other individuals with much higher payoffs than themselves. More surprisingly, some individuals reveal the emotion of guilt when they have much higher payoffs that other individuals.
    Keywords: Altruism, Envy, Guilt, Experimental Economics
    JEL: C79 C91 D64
    Date: 2019–05–19
  3. By: Alessandro Bucciol (Department of Economics (University of Verona)); Simona Cicognani (Department of Economics (University of Verona)); Natalia Montinari (University of Bologna)
    Abstract: We run a lab experiment testing the correlation between time preferences and cheating at the individual level, controlling for individuals' risk attitude. In our experiment cheating only entails a moral cost for the decision maker, while it imposes no externalities on others, and it is not associated to the risk of being detected and sanctioned. Our hypothesis is that cheating is higher among individuals who attribute more importance to the present. Our experiment also allows to record socio-demographic details and information on cognitive abilities of participants. We observe widespread cheating, and statistical evidence that cheating prevails among subjects who display present bias and over-confidence. Cheating also turns out to be negatively correlated with risk aversion and the discount factor, but only for men, while the impact of present bias seems to be stronger for women.
    Keywords: Cheating, Time Discounting, Quasi-hyperbolic preferences
    JEL: D91 C91 D81
    Date: 2019–06
  4. By: Roberto Galbiati (OSC - Observatoire sociologique du changement - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Emeric Henry (ECON - Département d'économie - Sciences Po); Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: How does the exposure to past institutions affect current cooperation? While a growing literature focuses on behavioral channels, we show how cooperation-enforcing institutions affect rational learning about the group's value. Strong institutions, by inducing members to cooperate , may hinder learning about intrinsic values in the group. We show, using a lab experiment with independent interactions and random rematching, that participants behave in accordance with a learning model, and in particular react differently to actions of past partners whether they were played in an environment with coercive enforcement or not.
    Keywords: Enforcement,social values,cooperation,learning,spillovers,persistence of insti- tutions,repeated games,experiments
    Date: 2019–06–03
  5. By: Alice Gimblett (Middlesex University London.); Daryna Grechyna (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: This study evaluates the efficiency of ‘nudging’ in a natural experiment conducted around London New Year’s Eve Fireworks campaign. We measure the click through rates in response to various versions of the email sent on behalf of the Mayor of London. The results demonstrate that crafting marketing messages using the behavioural concepts specificity, social proof and reciprocity can bring about an uplift in response rates to email communications compared to control groups which receive a standard message. Our results contribute to the empirical evidence on the validity of nudge theory.
    Keywords: natural experiment; nudges.
    JEL: C90 C93
    Date: 2019–06–11
  6. By: Marielle Brunette; Jonas Ngouhouo-Poufoun
    Abstract: We compare individual risk preferences elicited through a classic Ordered Lottery Selection (OLS) procedure with five gambles, and an extended procedure composed of nine gambles. The research question is about the stability of the risk preferences across these two elicitation variants. We implemented a field experiment with 1002 rural households in the Congo Basin from December 2013 to July 2014. We show that 1/3 of the sample is extremely risk averse regardless of the procedure. We found inconsistencies in risk preferences elicited across procedures. Indeed, 45.71% are characterized by instability of preferences, either weak (34.53%) or strong (11.18%); 42.81% of the sample exhibits stable preferences and the remaining 11.48% of the sample - initially risk neutral in the classic procedure - is classified as risk loving in the extended procedure. Undereducation can be seen as the main driver of the strong instability since the incremental change brought about by the attainment of secondary school on the likelihood to remain stable is ten times greater than the other considered drivers.
    Keywords: field experiment, risk aversion, ordered lottery selection, preferences, farmers.
    JEL: C93 D81
    Date: 2019
  7. By: Francisco Ilabaca (Department of Economics, University of California-Irvine); Greta Meggiorini (Department of Economics, University of California-Irvine); Fabio Milani (Department of Economics, University of California-Irvine)
    Abstract: This paper estimates a Behavioral New Keynesian model to revisit the evidence that passive US monetary policy in the pre-1979 sample led to indeterminate equilibria and sunspot-driven fluctuations, while active policy after 1982, by satisfying the Taylor principle, was instrumental in restoring macroeconomic stability. The model assumes "cognitive discounting", i.e., consumers and firms pay less attention to variables further into the future. We estimate the model allowing for both determinacy and indeterminacy. The empirical results show that determinacy is preferred both before and after 1979. Even if monetary policy is found to react only mildly to inflation pre-Volcker, the substantial degrees of bounded rationality that we estimate prevent the economy from falling into indeterminacy.
    Keywords: Behavioral New Keynesian model; Cognitive discounting; Myopia; Estimation under determinacy and indeterminacy; Taylor principle; Active vs passive monetary policy
    JEL: E31 E32 E52 E58
    Date: 2019–06

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