nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2020‒01‒20
eight papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Cultural evolution of emotional expression in 50 years of song lyrics By Brand, Charlotte Olivia; Acerbi, Alberto; Mesoudi, Alex
  2. Affective empathy in non-cooperative games By Jorge Vasquez; Marek Weretka
  3. Cognitive skills, strategic sophistication, and life outcomes By Fe, Eduardo; Gill, David; Prowse, Victoria
  4. Present Bias in Renewable Resources Management Reduces Agent’s Welfare By Persichina, Marco
  5. Economic Rationality: Investigating the Links between Uncertainty, Complexity, and Sophistication By Ilke Aydogan; Loic Berger; Valentina Bosetti
  6. Game form recognition in preference elicitation, cognitive abilities and cognitive load By Andreas, Drichoutis; Rodolfo, Nayga
  7. Status and Reputation Nudging By Julia Rose; Michael Kirchler; Stefan Palan
  8. Gender Differences in Face-to-Face Deceptive Behavior By Tim Lohse; Salmai Qari

  1. By: Brand, Charlotte Olivia (University of Exeter); Acerbi, Alberto; Mesoudi, Alex (University of Exeter)
    Abstract: The cultural dynamics of music has recently become a popular avenue of research in the field of cultural evolution, reflecting a growing interest in art and popular culture more generally. Just as biologists seek to explain population-level trends in genetic evolution in terms of micro-evolutionary processes such as selection, drift and migration, cultural evolutionists have sought to explain population-level cultural phenomena in terms of underlying social, psychological and demographic factors. Primary amongst these factors are learning biases, describing how cultural items are socially transmitted from person to person. As big datasets become more openly available and workable, and statistical modelling techniques become more powerful, efficient and user-friendly, describing population-level dynamics in terms of simple, individual-level learning biases is becoming more feasible. Here we test for the presence of learning biases in two large datasets of popular song lyrics dating from 1965-2015. We find some evidence of content bias, prestige bias and success bias in the proliferation of negative lyrics, and suggest that negative expression of emotions in music, and perhaps art generally, provides an avenue for people to not only process and express their own negative emotions, but also benefit from the knowledge that prestigious others experience similarly negative emotions as they do.
    Date: 2019–01–17
  2. By: Jorge Vasquez (Smith University; Group for Research in Applied Economics (GRAPE)); Marek Weretka (Group for Research in Applied Economics (GRAPE); University of Wisconsin-Madison)
    Abstract: According to psychology, affective empathy is one of the key processes governing human interactions. It refers to the automatic transmission and diffusion of emotions in response to others' emotions, which gives rise to emotional contagion. Contrary to other forms of empathy, affective empathy has received little attention in economics. In this paper, we augment the standard game-theoretic framework by allowing players to affectively empathize. Players' utility functions depend not only on the strategy prole being played, but also on the realized utilities of other players. Thus, players' realized utilities are interdependent, capturing emotional contagion. We offer a solution concept for these empathetic games and show that the set of equilibria is non-empty and, generically, finite. Motivated by psychological evidence, we analyze sympathetic and antipathetic games. In the former, players' utilities increase in others' realized utilities, capturing unconditional friendship; whereas in the latter the opposite holds, resembling hostility.
    Keywords: affective empathy, emotional contagion, Interdependent utilities, non-paternalistic preferences
    JEL: D64 D90 D91
    Date: 2020
  3. By: Fe, Eduardo (University of Manchester); Gill, David (Purdue University); Prowse, Victoria (Purdue University)
    Abstract: We investigate how childhood cognitive skills affect strategic sophistication and adult outcomes. In particular, we emphasize the importance of childhood theory-of-mind as a cognitive skill. We collected experimental data from more than seven hundred children in a variety of strategic interactions. First, we find that theory-of-mind ability and cognitive ability both predict level-k behavior. Second, older children respond to information about the cognitive ability of their opponent, which provides support for the emergence of a sophisticated strategic theory-of-mind. Third, theory-of-mind and age strongly predict whether children respond to intentions in a gift-exchange game, while cognitive ability has no influence, suggesting that different measures of cognitive skill correspond to different cognitive processes in strategic situations that involve understanding intentions. Using the ALSPAC birth-cohort study, we find that childhood theory-of-mind and cognitive ability are both associated with enhanced adult social skills, higher educational participation, better educational attainment, and lower fertility in young adulthood. Finally, we provide evidence that school spending improves theory-of-mind in childhood.
    Keywords: Cognitive skills; theory-of-mind; cognitive ability; fluid intelligence; children; experiment; strategic sophistication; level-k; bounded rationality; non-equilibrium thinking; intentions; gift-exchange game; competitive game; strategic game; ALSPAC; social skills; adult outcomes; life outcomes; education; fertility; labor market; wages; employment; school spending; childhood intervention. JEL Classification: C91; D91; J24
    Date: 2019
  4. By: Persichina, Marco
    Abstract: This paper analyses the effects of myopic and present-biased preferences on the welfare of a naive agent when she is engaged in an intertemporal harvesting activity from a stock of renewable resources. The analysis is conducted by taking into account also the nature of present-biased behaviors as phenomena that is derived from a dual system of discounting and of response to short and long-term stimuli. In the task of harvesting from a stock of renewable resources, the present biased preferences of a naive agent create a conflict between the long run benefit of the agent and the short run desire. Thus, this paper demonstrates and argues that in the decision-making, which involves intertemporal choices in renewable resources management, the prevalence of naive behavior, strongly influenced by the emotional-affective system, can lead to a reduction in the overall utility enjoyed by the individual due to the present bias.
    Keywords: Present bias, naive agent, intertemporal choice, harvesting, dual system discounting, agent’s welfare, instant utility.
    JEL: D03 D90 Q20
    Date: 2019
  5. By: Ilke Aydogan; Loic Berger; Valentina Bosetti
    Abstract: We report on a laboratory experiment measuring the preferences of a unique pool of risk professionals over various sources of uncertainty that entail different degrees of complexity. We then compare these preferences with those of a control group composed of social science students to obtain a deeper understanding of the mechanisms driving behaviors under risk and ambiguity. We find that (1) ambiguity aversion is robust to subjects’ degree of sophistication in probabilistic reasoning and background. (2) An association exists between attitudes toward ambiguity and compound risk for students/less sophisticated subjects, and is mainly explained by their attitudes toward complexity. Such an association does not exist for risk professionals/more sophisticated subjects. (3) The failure to reduce compound risk emerges as a sufficent, but not necessary, condition for ambiguity non-neutrality. These findings suggest that decision making under ambiguity cannot be reduced to decision making under risk. Keywords: Ambiguity aversion, reduction of compound lotteries, non-expected utility, model uncertainty, model misspecification JEL Codes: D81
    Date: 2019
  6. By: Andreas, Drichoutis; Rodolfo, Nayga
    Abstract: This study further examines the failure of game form recognition in preference elicitation (Cason and Plott, 2014) by making elicitation more cognitively demanding through a cognitive load manipulation. We hypothesized that if subjects misperceive one game for another game, then by depleting their cognitive resources, subjects would misconceive the more-cognitively demanding task for the less-cognitively demanding task at a higher rate. We find no evidence that subjects suffer from a first-price-auction game-form misconception but rather that once cognitive resources are depleted, subjects' choices are better explained by random choice. More cognitively able subjects are more immune to deviations from sub-optimal play than lower cognitively able subjects.
    Keywords: Game form recognition; game form misconception; Becker-DeGroot-Marschak mechanism; first price auction; preference elicitation; cognitive load; cognitive resources; Raven test; fluid intelligence
    JEL: C80 C91 D44
    Date: 2019–11–03
  7. By: Julia Rose (Department of Banking and Finance, University of Innsbruck); Michael Kirchler (Department of Banking and Finance, University of Innsbruck); Stefan Palan (Institute of Banking and Finance, University of Graz)
    Abstract: Status and reputation concerns are conjectured to be important especially in markets with information asymmetries between buyers and sellers, such as in credence goods markets. To investigate the effects of status and reputation on reciprocal behavior of sales personnel in a financial credence goods market, we run a natural field experiment. We send e-mail requests to insurance brokers asking for an appointment. We find that status nudging and, with a larger effect size, reputation nudging in the e-mails increase brokers’ response rates compared to a neutral request. Both effects are robust across all responses, only counting affirmative responses, and in urban and rural areas.
    Date: 2019–12–02
  8. By: Tim Lohse; Salmai Qari
    Abstract: We study the role of face-to-face interaction for gender differences in deceptive behavior and perceived honesty. In the first part, we compare women’s to men’s deceptive behavior using data from an incentivized income reporting experiment in which lies can be detected in the course of an audit. Between the three treatments of that experiment, (i) the degree, and (ii) the impact of the face-to-face interaction vary from none (computerized baseline treatment) to a little (treatment in which face-to-face communication triggers psychological effects such as greater lying aversion) to much (treatment in which the perception by others also enters as a strategic effect determining the probability of detecting a lie). In the computerized baseline treatment men and women lie alike. Women’s truthfulness increases when psychological effects of face-to-face interaction come into play. In contrast, male deceptive behavior does not change until the strategic effect of perceived honesty matters and men’s truthfulness rises way beyond the level of women. To elaborate on these gender differences, in the second part, participants are asked to assess the honesty of videotaped statements from an experimental setting identical to the third treatment. We find that more men are assessed as rather dishonest. Men’s dishonest perception is independent of whether they are actually truthful or not and whether they are assessed by men or women. We conclude that men anticipate their low perceived honesty in a face-to-face setting and, therefore, deceive less compared to women.
    Keywords: gender differences, lying, face-to-face interaction, honesty assessment, perception, video analysis, laboratory experiment
    JEL: C91 D91 J16
    Date: 2019

This nep-cbe issue is ©2020 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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