nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2020‒10‒05
seven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Nudging When the Descriptive Norm Is Low: Evidence from a Carbon Offsetting Field Experiment By Julia Blasch; Stefano Carattini
  2. The Impact of the Covid-19 Pandemic on Economic Behaviours and Preferences: Experimental Evidence from Wuhan By Jason Shachat; Matthew J. Walker; Lijia Wei
  3. Cognitive Abilities in the Wild: Population-scale game-based cognitive assessment By Mads Kock Pedersen; Carlos Mauricio Casta\~no D\'iaz; Mario Alejandro Alba-Marrugo; Ali Amidi; Rajiv Vaid Basaiawmoit; Carsten Bergenholtz; Morten H. Christiansen; Miroslav Gajdacz; Ralph Hertwig; Byurakn Ishkhanyan; Kim Klyver; Nicolai Ladegaard; Kim Mathiasen; Christine Parsons; Michael Bang Petersen; Janet Rafner; Anders Ryom Villadsen; Mikkel Wallentin; Jacob Friis Sherson; Skill Lab players
  4. How People Know their Risk Preference By Ruben C. Arslan; Martin Brümmer; Thomas Dohmen; Johanna Drewelies; Ralph Hertwig; Gert G. Wagner
  5. The predictive power of risk elicitation tasks By Michele Garagnani
  6. Anger and Strategic Behavior: A Level-k Analysis By Castagnetti, Alessandro; Proto, Eugenio
  7. Why Beauty Matters: Candidates' Facial Appearance and Electoral Success By ONO Yoshikuni; ASANO Masahiko

  1. By: Julia Blasch; Stefano Carattini
    Abstract: Nudges and behavioral interventions have become a popular tool to stimulate prosocial behavior. Little is known, however, on how to design effective social interventions in contexts in which the descriptive norm is low, i.e. when a desirable behavior is only practiced by a minority within the respective reference group. Bringing climate-friendly behaviors from nonnormative to normative is, however, crucial to tackle the climate crisis. We take up this challenge, devise a new strategy for social interventions, and test it with an especially sophisticated target group. In particular, we implemented a field experiment at two subsequent conferences in environmental economics, with which we examine the conference participants’ proclivity to offset their carbon emissions as part of the standard registration process. We introduced two randomized treatment conditions, one relying on social norms and one on social identity, to be compared with a neutral control group. The social norm treatment leverages past contributions to voluntary carbon emissions at those conferences. The social identity treatment primes participants’ social identity as environmental economists. We provide two main insights. First, if properly adjusted to the context, interventions leveraging social norms can be effective in changing behavior also when the descriptive norm is low and when the target group is composed of experts, if targeted individuals feel socially close to the referenced peer group. Second, the effectiveness of such interventions increases as individuals are exposed to multiple “doses” of treatment, although with decreasing marginal returns. Hence, our paper provides novel insights to policymakers and practitioners on the use of social interventions when the descriptive norm is low as well as on the ability of nudges to affect experts.
    Keywords: carbon offsets, social norms, social identity, nudge, field experiment
    JEL: A11 C93 D12 D91 H23 H41 Q54
    Date: 2020
  2. By: Jason Shachat (Durham University Business School; Economics and Management School, Wuhan University); Matthew J. Walker (Durham University Business School); Lijia Wei (Economics and Management School, Wuhan University)
    Abstract: We examine how the emergence of Covid-19 in Wuhan, and the ramifications of associated events, influence pro-sociality, trust and attitudes towards risk and ambiguity. We assess these influences using an experiment consisting of financially incentivized economic tasks. We establish causality via the comparison of a baseline sample collected pre-epidemic with five sampling waves starting from the imposition of a stringent lock- down in Wuhan and completed six weeks later. We find significant long-term increases - measured as the difference between the baseline and final wave average responses - in altruism, cooperation, trust and risk tolerance. Participants who remained in Wuhan during the lockdown exhibit lower trust and cooperation relative to other participants. We identify transitory effects from two events that permeated the public psyche. First, in the immediate aftermath of the Wuhan lockdown, there is a decrease in trust and an increase in ambiguity aversion. Second, the news of a high-profile whistleblower's death also decreases trust while heightening risk aversion.
    Keywords: Covid-19, Social Preferences, Cooperation, Trust, Risk Preferences
    JEL: C93 D64 D81 D91 I18
    Date: 2020
  3. By: Mads Kock Pedersen; Carlos Mauricio Casta\~no D\'iaz; Mario Alejandro Alba-Marrugo; Ali Amidi; Rajiv Vaid Basaiawmoit; Carsten Bergenholtz; Morten H. Christiansen; Miroslav Gajdacz; Ralph Hertwig; Byurakn Ishkhanyan; Kim Klyver; Nicolai Ladegaard; Kim Mathiasen; Christine Parsons; Michael Bang Petersen; Janet Rafner; Anders Ryom Villadsen; Mikkel Wallentin; Jacob Friis Sherson; Skill Lab players
    Abstract: Psychology and the social sciences are undergoing a revolution: It has become increasingly clear that traditional lab-based experiments fail to capture the full range of differences in cognitive abilities and behaviours across the general population. Some progress has been made toward devising measures that can be applied at scale across individuals and populations. What has been missing is a broad battery of validated tasks that can be easily deployed, used across different age ranges and social backgrounds, and employed in practical, clinical, and research contexts. Here, we present Skill Lab, a game-based approach allowing the efficient assessment of a suite of cognitive abilities. Skill Lab has been validated outside the lab in a crowdsourced population-size sample recruited in collaboration with the Danish Broadcast Company (Danmarks Radio, DR). Our game-based measures are five times faster to complete than the equivalent traditional measures and replicate previous findings on the decline of cognitive abilities with age in a large population sample. Furthermore, by combining the game data with an in-game survey, we demonstrate that this unique dataset has implication for key questions in social science, challenging the Jack-of-all-Trades theory of entrepreneurship and provide evidence for risk preference being independent of executive functioning.
    Date: 2020–09
  4. By: Ruben C. Arslan; Martin Brümmer; Thomas Dohmen; Johanna Drewelies; Ralph Hertwig; Gert G. Wagner
    Abstract: People differ in their willingness to take risks. Recent work found that revealed preference tasks (e.g., laboratory lotteries)—a dominant class of measures—are outperformed by survey-based stated preferences, which are more stable and predict real-world risk taking across different domains. How can stated preferences, often criticised as inconsequential “cheap talk,” be more valid and predictive than controlled, incentivized lotteries? In our multimethod study, over 3,000 respondents from population samples answered a single widely used and predictive risk-preference question. Respondents then explained the reasoning behind their answer. They tended to recount diagnostic behaviours and experiences, focusing on voluntary, consequential acts and experiences from which they seemed to infer their risk preference. We found that third-party readers of respondents’ brief memories and explanations reached similar inferences about respondents’ preferences, indicating the intersubjective validity of this information. Our results help unpack the self perception behind stated risk preferences that permits people to draw upon their own understanding of what constitutes diagnostic behaviours and experiences, as revealed in high-stakes situations in the real world.
    Keywords: risk preferences, self-reports, revealed preferences, intersubjective validity, BASE-II, SOEP-IS
    Date: 2020
  5. By: Michele Garagnani
    Abstract: This work reports an online experiment with a general-population sample examining the performance of budget-choice tasks for elicitation of risk attitudes. First, I compare the investment task of Gneezy and Potters (1997) with the standard choicelist method of Holt and Laury (2002), and evaluate their performance in terms of the number of correctly-predicted binary decisions in a set of out-of-sample lottery choices. There are no significant differences between the tasks in this sense, and performance is modest. Second, I included three additional budget-choice tasks (selection of a lottery from a linear budget set) where optimal decisions should have been corner solutions, and find that a large majority of participants provided interior solutions instead, casting doubts on subjects’ understanding of tasks of this type.
    Keywords: Risk preferences, elicitation methods, budget sets, portfolio Choices
    JEL: C91 D81 C83
    Date: 2020–09
  6. By: Castagnetti, Alessandro (University of Warwick); Proto, Eugenio (University of Glasgow)
    Abstract: Anger is an important driver in shaping economic activities, particularly in instances that involve strategic interactions between individuals. Here we test whether anger impairs the capacity to think strategically, and we analyze the implications of our result on bargaining and cooperation games. Accordingly, with a preregistered experiment (Experiment 1), we externally induce anger to a subgroup of subjects following a standard procedure that we verify by using a novel method of text analysis. We show that anger can impair the capacity to think strategically in a beauty contest game. Angry subjects choose numbers further away from the Nash equilibrium, and earn significantly lower profits. A structural analysis estimates that there is an increase in the share of level-zero players in the treated group compared to the control group. Furthermore, with a second preregistered experiment (Experiment 2), we show that this effect is not common to all negative emotions. Sad subjects do not play significantly further away from the Nash equilibrium than the control group in the same beauty contest game of Experiment 1, and sadness does not lead to more level-zero play.
    Keywords: anger, induced emotions, strategic interactions, beauty-contest
    JEL: C92 D90 D91
    Date: 2020–09
  7. By: ONO Yoshikuni; ASANO Masahiko
    Abstract: Why do better-looking candidates gain more votes in elections? Existing research shows that candidates' facial appearance—perceived beauty, in particular—affects the fate of their election outcomes. Yet, little is known about the mechanisms by which the beauty of candidates creates a premium in elections. To solve this puzzle, we ran a survey that asked around 1,500 people to subjectively evaluate more than 400 real candidates' facial appearance, including beauty. We then conducted a survey experiment with about 3,000 people that explored the effects of candidate beauty on voter perceptions. Our findings demonstrate that neither candidates' facial expression nor the impressions they impart on the viewer, such as smiling, competence and trustworthiness, hinder the positive influence of perceived beauty of the candidates on election outcomes. We find that the beauty of the candidates attracts the attention of voters and alters voters' impressions of the candidates' prospects of winning the election, suggesting that voters' incentives to seek information and get on the bandwagon are driving them to support good-looking candidates.
    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.