nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2020‒09‒21
four papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Pro-environmental behavior and morality: An economic model with heterogeneous preferences By Ayoubi, Charles; Thurm, Boris
  2. Recruiting experimental subjects using WhatsApp By Jorrat, Diego
  3. Efficiency Wages with Motivated Agents By Jesper Armouti-Hansen; Lea Cassar; Anna Deréky
  4. Conflict Economics and Psychological Human Needs By Thomas Gries; Veronika Müller

  1. By: Ayoubi, Charles; Thurm, Boris
    Abstract: Some individuals voluntarily engage in costly pro-environmental actions although their efforts have limited direct benefits. This paper proposes a novel economic model with heterogeneous agents explaining why. Each agent has a homo moralis type of preference, which combines selfishness and morality. Morality is modeled here as the payoff an agent receives if all other agents act like her. Our model builds on extant literature showing that homo moralis preferences have an evolutionary advantage to better evaluate the behavioral motives of agents. Shedding light on how people respond not only to economic but also moral incentives, we contribute to the ongoing policy debate on the design of efficient environmental policies.
    Date: 2020–08–27
  2. By: Jorrat, Diego
    Abstract: The aim of many experiments is to estimate the effect of different interventions on subjects' decision making. However, obtaining large samples and internal validity is challenging. This paper presents an alternative device at almost no cost that can easily provide a very large number of participants (700 in 5 hours). We asked 14 students to invite their WhatsApp contacts to participate in an online experiment. The students created a total of 80 diffusion groups with 25 contacts each. Using the diffusion groups as clusters, we ran a cluster randomization procedure in order to assign subjects to a framing experiment (treatment + control). We obtained the same level of attrition, duplicates and uninvited subjects across the treatment and control groups. Moreover, the experiment yielded consistent results in line with the framing literature.
    Keywords: Recruiting, Online Experiments, Prisoner's Dilemma, Randomization
    JEL: C8 C9 C99 D70
    Date: 2020–07–01
  3. By: Jesper Armouti-Hansen; Lea Cassar; Anna Deréky
    Abstract: Many organizations nowadays combine profits with a social mission. This paper reveals a new hidden benefit of the mission: its role in facilitating the emergence of efficiency wages. We show that in a standard gift-exchange principals highly underestimate agents’ reciprocity and, thereby, offer wages that are much lower than the profit-maximizing level. This bias has a high social cost: if principals had correct beliefs and thus offered the profit-maximizing wage, efficiency would increase by 86 percent. However, the presence of a social mission (in the form of a positive externality generated by the agent’s effort), by increasing principals' trust, acts as a debiasing mechanism and, thereby, increases efficiency by 50 percent. These results contribute to our understanding of behavior in mission-oriented organizations, to the debate about the relevance of reciprocity in the workplace and open new questions about belief formation in prosocial contexts.
    Keywords: mission motivation, reciprocity, gift exchange, beliefs, efficiency wages
    JEL: D23 M52
    Date: 2020
  4. By: Thomas Gries (Paderborn University); Veronika Müller (Paderborn University)
    Abstract: The basic approach in conflict economics, to explain motives and conditions for civil strife, is based on the assumption of choice. Wars, civil conflicts, or terrorism are thus analyzed as outcomes of goal-driven choices according to underlying incentives and constraints. Because conflict involves choices between nonviolent and violent alternatives, it is perceived as a pure result of strategic choice – that is, calculated, rational thinking with the aim to achieve profitable ends. While this would imply that rational agents are primarily motivated by material gains, we argue that individuals may also join groups and use violence for psychological reasons – and this choice is not subject to irrationality. Factors such as group belongingness, threat, a shared group-identity, and self-esteem are important determinants in explaining violent mobilization. In this regard, the current paper postulates that agents make foremost choices in order to serve their mental preferences, or in psychological terms, their fundamental human needs, i.e. needs that address the human drive to survive, to understand and control their environment, to find their role and purpose in life, and to feel accepted and efficacious in their choices and actions. We reviewed a vast amount of interdisciplinary literature and identified three need dimensions: existential, relational, and self-related human needs. Each of these needs is shaped by internal determinants, such as agent´s dispositions, and by external determinants, such as economic, social, political, or environmental factors. Therefore, to properly understand why individuals join rebel groups and are willing to accept a high level of personal risk to advance their groups´ goals, we have to consider, beyond economic incentives, also their psychological human needs.
    Keywords: Conflict economics; Psychological human needs; Reconciliation; Individual decision-making
    JEL: D74 D91 I31 Z1
    Date: 2020–09

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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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.