nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2020‒03‒02
eight papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Ambiguity and Excuse-Driven Behavior in Charitable Giving By Garcia, Thomas; Massoni, Sebastien; Villeval, Marie Claire
  2. Before the Lunch Line: Effectiveness of Behavioral Economic Interventions for Pre-Commitment on Elementary School Children’s Food Choices By Ozturk, Orgul; Frongillo, Edward; Blake, Christine; Turner-McGrievy, Gabrielle
  3. Prosociality and Risk Preferences in the Financial Sector By Max Deter
  4. What do lab experiments tell us about the real world? The case of lotteries with extreme payoffs By Raman Kachurka; Michał Krawczyk; Joanna Rachubik
  5. Cognitive abilities and risk taking: the role of preferences By Michalis Drouvelis; Johannes Lohse
  6. Do just deserts and competition shape patterns of cheating? By Grundmann, Susanna
  7. Cooperation in a Fragmented Society: Experimental Evidence on Syrian Refugees and Natives in Lebanon By Michalis Drouvelis; Bilal Malaeb; Michael Vlassopoulos; Jackline Wahba
  8. Working Too Much for Too Little: Stochastic Rewards Cause Work Addiction By Brice Corgnet; Simon Gaechter; Roberto Hernan Gonzalez

  1. By: Garcia, Thomas (GATE, University of Lyon); Massoni, Sebastien (University of Lorraine); Villeval, Marie Claire (CNRS, GATE)
    Abstract: A donation may have ambiguous costs or ambiguous benefits. Behavior in a laboratory experiment suggests that individuals use this ambiguity strategically as a moral wiggle room to act less generously without feeling guilty. Such excuse-driven behavior is more pronounced when the costs of a donation – rather than its benefits – are ambiguous. However, the importance of excuse-driven behavior is comparable under ambiguity and under risk. Individuals exploit any type of uncertainty as an excuse not to give, regardless of the nature of this uncertainty.
    Keywords: ambiguity, excuse-driven behavior, charitable giving, social preferences, experiment
    JEL: C91 D64 D81
    Date: 2019–12
  2. By: Ozturk, Orgul; Frongillo, Edward; Blake, Christine; Turner-McGrievy, Gabrielle
    Abstract: In this study, we intervened in elementary schools on lunch entrée selection using some of the behavioral economic methods shown to be effective in earlier food choice studies. Unlike many earlier behavioral interventions, which were mostly done in controlled environments and smaller café type settings for one-off interactions, we conducted our interventions in a real-world environment in twelve elementary schools in one school district in South Carolina over nine school weeks. By increasing salience and prominence of the healthy entrée of the day through visual and verbal tools, we nudged students towards selecting healthier options in treatment schools. We estimated the treatment effects using a difference-in-differences setup, comparing changes in the share of students selecting nudged entrées during the treatment period relative to the shares before the treatment period in treatment and comparison schools. Our estimates show that the nudges are effective when present. They increase selection of the healthy option by thirteen to thirty-five percent on the days the entrée is treated. Effects disappear when the nudge is removed, however, and there is evidence for reduced effectiveness of nudges in repeat instances. There is no evidence of habit formation.
    Keywords: Nudge, behavioral economics, healthy eating, school lunch, salience, prominence, difference-in-differences
    JEL: C91 C93 I12
    Date: 2019
  3. By: Max Deter
    Abstract: Using large-scale data from the German Socio-Economic Panel (SOEP), this paper finds that financial professionals have a lower prosociality and riskier behavior than a control group. I interpret these findings using the person-organization fit theory, and thus, the compatibility between the employee’s personality and the prevailing culture in their organization. The financial sector attracts riskier individuals, but professionals become less prosocial in the sector. These attitudes are associated with behavioral consequences, and are mainly driven by male professionals in lower management.
    Keywords: prosocial motivation; risk; financial sector; selection; socialization
    JEL: D64 D81 D53 D90 M5
    Date: 2020
  4. By: Raman Kachurka (Faculty of Economic Sciences, University of Warsaw); Michał Krawczyk (Faculty of Economic Sciences, University of Warsaw); Joanna Rachubik (Faculty of Economic Sciences, University of Warsaw)
    Abstract: In this study, we conduct a laboratory experiment in which the subjects make choices between real-world lottery tickets typically purchased by lottery customers. In this way, we are able to reliably offer extremely high potential payoffs, something rarely possible in economic experiments. In a between-subject design, we separately manipulate a number of features that distinguish the situation faced by the customers in the field and by subjects in typical laboratory experiments. We also have the unique opportunity to compare our data to actual sales data provided by the operator of the lottery. Overall, we find the distributions to be highly similar (meaning high external validity of the laboratory experiment). The only manipulation that makes a major difference is that when the probabilities of winning specific amounts are explicitly provided (which is not the case in the field), choices shift towards options with lower payoff variance. We also find that standard laboratory measures of risk posture fail to explain our subjects’ behavior in the main task.
    Keywords: Decision making under risk, External validity, Longshot bias, Perception of randomness, Number preferences in lotteries
    JEL: C91 D01 D81 D83 D91
    Date: 2020
  5. By: Michalis Drouvelis (University of Birmingham); Johannes Lohse (University of Birmingham)
    Abstract: A growing literature in economics suggests that cognitive abilities and risk preferences could be related. However, since neither risk preferences nor cognitive abilities can be observed directly, it is unclear whether measured associations point towards a true relationship or instead result from systematic measurement errors. Previous studies, which have raised this concern, only test this proposition indirectly. In this paper, we complement their approach by providing a direct test that sheds light on the existence and direction of a link between risk preferences and cognitive abilities once systematic measurement errors are taken into account. Using a lab experiment that employs a repeated choice design, we give participants the opportunity to revise an initial choice made in a simple lottery task. We measure cognitive abilities via the cognitive reflection task and affect individuals' access to cognitive resources by exogenously varying their cognitive load across treatments. Our results provide evidence that cognitive abilities remain strongly correlated with risk preferences after errors are controlled for.
    Keywords: cognitive abilities, risk preferences, repeated choice design, experiment
    JEL: C90 D81 D91
    Date: 2020–02
  6. By: Grundmann, Susanna
    Abstract: Previous research has shown that people accept inequalities resulting from differences in performance but aim at reducing those resulting from differences in luck, corresponding to the fairness principle of just deserts. But will just deserts also intrinsically prevent people from cheating for their personal gain in a situation in which cheating can be disguised? And will competitive pressure crowd-out such an intrinsic motivation? I investigate these questions in a lab experiment based on Grundmann and Lambsdorff (2017). Subjects earn income and report a tax rate, which they determine by rolling a die under a cup, creating an incentive to cheat. Treatments vary whether the size of income is based on performance or luck and whether there is competition for a high income. In the luck treatments, just deserts would imply that subjects aim at reducing inequalities, such that cheating should decrease with income. If income is based on performance, the opposite should be true. The results show that cheating increases with income in the performance and the luck treatments, such that lucky subjects as well as high performers do not aim at reducing inequality. Just deserts thus do not intrinsically prevent subjects from cheating for their personal gain. Competition has no systematic effect on cheating.
    Keywords: cheating,tax morale,laboratory experiment,income,real-effort task,distributive justice,just deserts,competition
    JEL: H26 C91
    Date: 2020
  7. By: Michalis Drouvelis; Bilal Malaeb; Michael Vlassopoulos; Jackline Wahba
    Abstract: Lebanon is the country with the highest density of refugees in the world, raising the question of whether the host and refugee populations can cooperate harmoniously. We conduct a lab-in-the-field experiment in Lebanon studying intra- and inter-group behavior of Syrian refugees and Lebanese nationals in a repeated public good game without and with punishment. We find that homogeneous groups, on average, contribute and punish significantly more than mixed groups. These patterns are driven by the Lebanese participants. Our findings suggest that it is equally important to provide adequate help to the host communities to alleviate any economic and social pressures.
    Keywords: refugees, public good game, cooperation, punishment
    JEL: D91 J50 F22
    Date: 2019
  8. By: Brice Corgnet (University of Lyon); Simon Gaechter (University of Nottingham); Roberto Hernan Gonzalez (University of Burgundy)
    Abstract: People are generally assumed to shy away from activities generating stochastic rewards, thus requiring extra compensation for handling any additional risk. In contrast with this view, neuroscience research with animals has shown that stochastic rewards may act as a powerful motivator. Applying these ideas to the study of work addiction in humans, and using a new experimental paradigm, we demonstrate how stochastic rewards may lead people to continue working on a repetitive and effortful task even after monetary compensation becomes saliently negligible. In line with our hypotheses, we show that persistence on the work task is especially pronounced when the entropy of stochastic rewards is high, which is also when the work task generates more stress to participants. We discuss the economic and managerial implications of our findings.
    Keywords: Incentives; Work Addiction; Occupational Health; Experiments
    Date: 2020–03

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