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on Cognitive and Behavioural Economics |
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Issue of 2020‒12‒21
seven papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Pastore, Chiara (University of York); Schurer, Stefanie (University of Sydney); Tymula, Agnieszka (University of Sydney); Fuller, Nicholas (University of Sydney); Caterson, Ian (University of Sydney) |
| Abstract: | We study economic decision-making of 284 people with obesity and pre-diabetes who participated in a 6-months randomised controlled trial to control weight and prevent diabetes. To elicit preferences, we use incentive-compatible experimental tasks that participants completed during their medical screening examination. We find that, on average, participants are risk averse, show no evidence of present bias, and have impatience levels comparable to healthy samples described in the international literature. Variations in present bias and impatience are not significantly associated with variations in markers of obesity. But we find a significant negative association between risk tolerance and BMI and other markers of obesity for women. A 1 standard deviation increase in risk tolerance is associated with a 0.2 standard deviation drop in BMI and waist circumference. Impatience moderates the link between risk tolerance and obesity. We replicate the key finding of interaction effects between risk and time preferences using survey data from a nationally representative sample of 6,281 Australians with similar characteristics. Deviating markedly from the literature, we conclude that risk tolerance brings benefits for health outcomes if combined with patience in this understudied but highly policy-relevant population. |
| Keywords: | impatience, risk tolerance, obesity, incentive-compatible economic experiment, lab-in-field experiment |
| JEL: | C9 D9 D81 I12 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13915&r=all |
| By: | Amitesh Saha |
| Abstract: | We review economic research regarding the decision making processes of individuals in economics, with a particular focus on papers which tried analyzing factors that affect decision making with the evolution of the history of economic thought. The factors that are discussed here are psychological, emotional, cognitive systems, and social norms. Apart from analyzing these factors, it deals with the reasons behind the limitations of rational decision-making theory in individual decision making and the need for a behavioral theory of decision making. In this regard, it has also reviewed the role of situated learning in the decision-making process. |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2012.02968&r=all |
| By: | James C. Cox; Vjollca Sadiraj; Susan Xu Tang |
| Abstract: | Decades of robust data from public good games with positive and negative externalities challenges internal consistency axioms that comprise rational choice theory. This paper reports an extension of rational choice theory that incorporates observable moral reference points. This morally monotonic choice theory is consistent with data in the literature and has idiosyncratic features that motivate new experimental designs. We report experiments on choices in public good games with positive, negative, and mixed-sign externalities, with and without non-binding quotas on extractions or minimum contributions. Data favors choices predicted by moral monotonicity over choices predicted by: (a) conventional rational choice theory; or (b) conventional reference dependent model of loss aversion. |
| Keywords: | choice theory, public goods, externalities, crowding out, moral reference points, experiment |
| JEL: | C91 D62 H41 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2020-05&r=all |
| By: | Marc Oliver Rieger; Mei Wang; Daniel Hausmann |
| Abstract: | It is a common phenomenon that people tend to acquire more information in a decision task than a rational benchmark would predict. What is the reason behind this? To answer this question we conducted an information acquisition experiment that has been carefully designed to disentangle several plausible reasons for information overpurchasing before decision-making. A within-subject experiment with a simple basic information acquisition task on an investment project, equivalent formulated lotteries, estimations of probability, and an additional option to satisfy one’s curiosity was used to test five different potential reasons. The results show that overpurchasing of information can be explained nearly entirely by systematic information-processing errors (misestimationor incorrect Bayesean updating). Other factors, such as overoptimism on the validity of new information, risk aversion, ambiguity aversion, and curiosity for (irrelevant) information, play at most a minor role. Our results imply that overinvestment in information acquisition can be mostly avoided if more detailed informationis given to decision makers on how much (or little) further information can improve the decision quality. |
| Keywords: | sequential information acquisition, ambiguity, Bayesian updating, financial decision-making |
| JEL: | G11 G12 G1 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:trr:qfrawp:202002&r=all |
| By: | Michael Thaler |
| Abstract: | Motivated reasoning is a bias in inference in which people distort their updating process in the direction of more attractive beliefs. Prior work has shown how motivated reasoning leads people to form overly "positive" beliefs that also serve to bolster one's self-image in domains such as intelligence, prosociality, and politics. In this paper, I study whether positivity-motivated reasoning persists in domains where self-image does not play a role. In particular, I analyze whether individuals motivatedly reason to think that the world is a better place for others. Building off of the design from Thaler (2020), I conduct a large online experiment to test for positivity-motivated reasoning on issues such as cancer survival rates, others' happiness, and infant mortality. I find no systematic evidence for positivity-motivated or negativity-motivated reasoning, and can rule out modest effects. Positivity is not a sufficient condition for motivated reasoning. |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2012.01548&r=all |
| By: | C. Bram Cadsby (Department of Economics and Finance, University of Guelph, Guelph ON Canada); Fei Song (Ted Rogers School of Management, Ryerson University, Toronto ON Canada); Ninghua Du (School of Economics, Shanghai University of Finance and Economics, Shanghai, China) |
| Abstract: | People form first impressions of others and make judgments about their social traits and character on the basis of facial perceptions. We implement a controlled laboratory experiment to investigate whether people can glean information about another person's other-regarding preferences from photographs of their face. To do so, we conduct a dictator game with an allocator and a recipient, and then present pairs of allocator photos to observers. Each pair portrays one relatively generous allocator and another who has demonstrated less generosity. The experimental results show that the observers cannot accurately recognize more generous allocators, but instead make systematic errors. In particular, the observers believe that allocators who are rated as being more attractive by others are more generous, despite there being no actual relationship between physical attractiveness and generosity. |
| Keywords: | Experiment, Dictator Game, Social Preference, Other-regarding Preferences, Generosity, Appearance. |
| JEL: | C91 D91 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:gue:guelph:2020-07&r=all |
| By: | Patrick Mellacher |
| Abstract: | Does COVID-19 change the willingness to cooperate? Four Austrian university courses in economics play a public goods game in consecutive semesters on the e-learning platform Moodle: two of them in the year before the crisis, one immediately after the beginning of the first lockdown in March 2020 and the last one in the days before the announcement of the second lockdown in October 2020. Between 67% and 76% of the students choose to cooperate, i.e. contribute to the public good, in the pre-crisis year. Immediately after the imposition of the lockdown, 71% choose to cooperate. Seven months into the crisis, however, cooperation drops to 43%. Depending on whether two types of biases resulting from the experimental design are eliminated or not, probit and logit regressions show that this drop is statistically significant at the 0.05 or the 0.1 significance level. |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2011.09189&r=all |