nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2020‒11‒30
four papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Learning Language: An Experiment By Daniel Houser; Yang Yang
  2. When are groups less moral than individuals? By Pol Campos-Mercade
  3. How Does Working-Time Flexibility Affect Workers’ Productivity in a Routine Job? Evidence from a Field Experiment. By Marie Boltz; Bart Cockx; Ana Maria Diaz; Luz Magdalena Salas
  4. Prospect theory in experiments: behaviour in loss domain and framing effects. By Géraldine Bocquého; Julien Jacob; Marielle Brunette

  1. By: Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Yang Yang (Lingnan College, Sun Yat-sen University)
    Abstract: We develop a method for random assignment of language to participants in a controlled laboratory experiment, and use this to test the hypothesis that languages are learned more quickly when they can be identified with fewer number of observations. While the theory based on this hypothesis has generated substantial attention since being advanced by Blume (2005), evidence on its empirical validity has been elusive. Here we develop a novel extension of coordination games within which languages emerge endogenously. We show, first, that one can control features of an emergent language by varying the game’s incentives. This enables us to compare speed of learning across participants randomly assigned to different languages. Our data provide cogent evidence supporting the above hypothesis and Blume’s (2005) theory: Languages with compositional structures can be identified with fewer observations and are learned more quickly, and in this sense are efficient. Despite this, we find inefficient languages to sometimes emerge when they can be expressed using simple rules.
    Keywords: testing the efficiency theory of language, random assignment of language, laboratory experiment
    JEL: C91 D83
    Date: 2020–11
  2. By: Pol Campos-Mercade (Department of Economics, University of Copenhagen)
    Abstract: People are less likely to make moral decisions when they are in groups. I study when this phenomenon makes groups less likely to produce a morally desirable outcome than one individual alone. I formulate and test a model in which a moral outcome occurs if at least one individual makes a costly decision. Using a lab experiment and data from field experiments on the bystander effect, I show that if most individuals are moral, the moral outcome is more likely to be produced by one individual, whereas if most individuals are immoral, it is more likely to be produced by a group. This rule is not only useful for reconciling previous mixed evidence on moral decisions in groups, but may also be applied to better design organizations and institutions.
    Keywords: moral behavior, group size, bystander effect, social preferences
    JEL: C92 D64 D90
    Date: 2020–11–18
  3. By: Marie Boltz; Bart Cockx; Ana Maria Diaz; Luz Magdalena Salas
    Abstract: We conducted an experiment in which we hired workers under different types of contracts to evaluate how flexible working time affects on-the-job productivity in a routine job. Our approach breaks down the global impact on productivity into sorting and behavioral effects. We find that all forms of working-time flexibility reduce the length of workers’ breaks. For part-time work, these positive effects are globally counterbalanced. Yet arrangements that allow workers to decide when to start and stop working increase global productivity by as much as 50 percent, 40 percent of which is induced by sorting.
    Keywords: Flexible work arrangements, part-time work, productivity, labor market flexibility, work–life balance.
    JEL: J21 J22 J23 J24 J33
    Date: 2020
  4. By: Géraldine Bocquého; Julien Jacob; Marielle Brunette
    Abstract: In the original specification of cumulative prospect theory, distinct sets of parameters control for the curvature of the value function and the shape of the probability weighting function. There is one for the gain domain and one for the loss domain. However, in most estimations, behaviour over losses is assumed to perfectly reflect behaviour over gains, through a unique set of parameters. We examine the consequences of relaxing this simplifying assumption in the context of Tanaka et al.’s (2010) risk-experiment procedure. On the one hand, we show that subjects’ behaviour for gains is mostly reflected for losses at the aggregate and individual levels, and is consistent with the cumulative prospect theory fourfold pattern. However reflection is partial as the mean curvature of the value function is slightly less convex for losses than it is concave for gains. These results are robust to a high-stake context. Then, we demonstrate that assuming reflection when measuring loss aversion is innocuous neither at the aggregate nor at the individual level. On the other hand, we highlight the existence of a strong, negative and persistent framing effect on values elicited for loss aversion.
    Keywords: risk preferences, Tanaka-Camerer-Nguyen method, probability weighting, loss aversion, reflected behaviour.
    JEL: C91 D81
    Date: 2020

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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