nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2019‒10‒21
six papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Public Goods and Future Audiences: Acting as Role Models? By Giuseppe Attanasi; Roberta Dessi; Frédéric Moisan; Donald Robertson
  2. The Stability of Conditional Cooperation: Egoism Trumps Reciprocity in Social Dilemmas By Luciano Andreozzi; Matteo Ploner; Ali Seyhun Saral
  3. Can information alleviate overconfidence? A randomized experiment on financial market predictions By Takanori IDA; Ryo OKUI
  4. Facilitating Healthy Dietary Habits: An Experiment with a Low Income Population By Belot, Michèle; James, Jonathan; Spiteri, Jonathan
  5. The conditional contribution mechanism for repeated public goods: The general case By Oechssler, Joerg; Reischmann, Andreas; Sofianos, Andis
  6. Charitable giving by the poor: A field experiment on matching and distance to charitable output in Kyrgyzstan By Adena, Maja; Hakimov, Rustamdjan; Huck, Steffen

  1. By: Giuseppe Attanasi (Université Côte d'Azur, CNRS, GREDEG, France); Roberta Dessi (Toulouse School of Economics (TSE)); Frédéric Moisan (University of Cambridge); Donald Robertson (University of Cambridge)
    Abstract: Individuals' decisions to behave prosocially (or the contrary) can often be observed by other individuals, with no direct connection to them, but who may nevertheless be influenced by them (e.g. through social media). Does knowing that they may be viewed as role models by other, notably younger, people a ect the way individuals behave? Does it make them more likely to behave prosocially? We study how participants' behavior in an experimental public good game is affected when they know that information about their choices and outcomes, together with different sets of information about their identity, will be transmitted the following year to a set of new, unknown, younger participants - with no payoff linkages between the two sets of players. When subjects know their photo, choices and outcomes will be transmitted, they contribute significantly less. We consider different possible explanations, and argue that the most convincing is based on image concerns, but in a surprising way: subjects in the photo treatment care about not being perceived as "suckers" by future players.
    Keywords: Role models, image concerns, identity, audience, public goods
    JEL: C91 C92 H41
    Date: 2019–10
  2. By: Luciano Andreozzi (Department of Economics, University of Trento); Matteo Ploner (Department of Economics, University of Trento); Ali Seyhun Saral (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: An often-replicated result in the experimental literature on social dilemmas is that a large share of subjects reveal conditionally cooperative preferences. Cooperation generated by this type of preferences is notoriously unstable, as individuals reduce their contributions to the public good in reaction to other subjects free-riding. This has led to the widely-shared conclusion that cooperation observed in experiments (and its collapse) is mostly driven by imperfect reciprocity. In this study, we explore the possibility that reciprocally cooperative preferences may themselves be unstable. We do so by observing the evolution of subjects’ preferences in an anonymously repeated social dilemma. Our results show that a significant fraction of reciprocally cooperative subjects become selfish in the course of the experiment, while the reverse is rarely observed. We are thus driven to the conclusion that egoism is more resistant to exposure to social dilemmas than reciprocity.
    Keywords: reciprocity, conditional cooperation, strategy method
    JEL: C72 C91
    Date: 2019–10
  3. By: Takanori IDA; Ryo OKUI
    Abstract: In this study, we examine how information provision a ects the degree of overcon dence using an online experiment. The 4,210 experimental participants engaged in stock market prediction exercises in 2014 were asked to evaluate their absolute and relative performance. We conducted a randomized controlled trial such that randomly selected participants obtained information about their own performance and/or the distribution of others' performances before evaluating their performances. We nd that while participants exhibit overcon dence bias, this can be alleviated by information provision and that the e ect of the elimination of overcon dence is stronger when only partial information, rather than complete information, is provided. Further, we show that the mere provision of information, even if it is consistent with prior beliefs, decreases the degree of overcon dence.
    Keywords: Overcon dence, information provision, randomized controlled trial, online experiment, stock market prediction.
    JEL: C91 D83 D91
    Date: 2019–10
  4. By: Belot, Michèle (European University Institute); James, Jonathan (University of Bath); Spiteri, Jonathan (University of Malta)
    Abstract: This paper tests an intervention aimed at facilitating (cognitively) the adoption of healthy dietary habits. We provide easy-to-understand information about the risks of developing diabetes or heart diseases and give easy-to-follow dietary recommendations to minimize these risks. We implement two variations, one consisting of generic information, the other consisting of information tailored to the individual, the latter resembling newly developed on-line health assessment tools. On top of the information treatment, we implement a second experimental variation nudging people into spending more time thinking about their dietary choices. We find evidence that the information intervention leads to healthier choices in the short run, but mostly in the generic treatment. Surprisingly, we find that people are on average pessimistic about their health, and therefore receive good news on average when the information is tailored to them. We find no evidence that increasing the time available to make choices leads to healthier choices, and find no evidence of long-term changes in habits. These results do not support a bounded rationality explanation for poor dietary choices.
    Keywords: health risks, dietary habits, bounded rationality, heuristics, information, time availability, laboratory experiments
    JEL: I12 I18 H51 D83
    Date: 2019–10
  5. By: Oechssler, Joerg; Reischmann, Andreas; Sofianos, Andis
    Abstract: We present a new and simple mechanism for repeated public good environments. In the Conditional Contribution Mechanism (CCM), agents send two message of the form, "I am willing to contribute x units to the public good if in total y units are contributed." This mechanism offers agents risk-free strategies, which we call unexploitable. We prove that if agents choose unexploitable messages in a Better Response Dynamics model, all stable outcomes of the CCM are Pareto efficient. We conduct a laboratory experiment to investigate whether observed behavior is consistent with this prediction. In the complete information case we find that indeed almost 80% of outcomes are Pareto optimal. Furthermore, comparison treatments with the Voluntary Contribution Mechanism show that the CCM leads to significantly higher contribution rates. Even under incomplete information, contributions are fairly high and do not deteriorate over time.
    Keywords: Experimental Economics,Public Goods,Mechanism Design,Better Response Dynamics
    JEL: C72 C92 D82 H41
    Date: 2019
  6. By: Adena, Maja; Hakimov, Rustamdjan; Huck, Steffen
    Abstract: Previous studies of charitable giving have focused on middle or higher income earners in Western countries, neglecting the poor. Despite this focus, the lowest income groups are often shown to contribute substantial shares of their income to charitable causes. In a large-scale natural field experiment with over 180,000 cli-ents of a micro-lending company in Kyrgyzstan, we study charitable giving by a population that is much poorer relative to the typical donors that have been stud-ied so far. In a 2x2 design, we explore two main hypotheses about giving by the poor: (i) that they are more price sensitive and (ii) that they care about their prox-imity to the charitable project. We find evidence in favor of the former hypothesis but not of the latter.
    Keywords: Charitable giving,field experiments,matching donations
    JEL: C93 D64 D12
    Date: 2019

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