nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2021‒01‒11
four papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. The Expert and The Charlatan: an Experimental Study in Economic Advice By Aristotelis Boukouras; Theodore Alysandratos; Sotiris Georganas; Zacharias Maniadis
  2. Debiasing Through Experience Sampling: The Case of Myopic Loss Aversion. By Laura Hueber; Rene Schwaiger
  3. The Homo Economicus Under Experimental Attack By Schlicht, Ekkehart
  4. Deriving rules of thumb for facility decision making in humanitarian operations By TURKEŠ, Renata; SÖRENSEN, Kenneth; PALHAZI CUERVO, Daniel

  1. By: Aristotelis Boukouras; Theodore Alysandratos; Sotiris Georganas; Zacharias Maniadis
    Abstract: How do people choose what economic advice to heed? We develop a set of validated multiple-choice questions on economic policy problems, to examine empirically the persuasiveness of expert versus populist advice. We define populism as advice that conforms to commonly held beliefs, even when wrong. Two (computerised) advisers suggest answers to each question, and experimental participants are incentivised to choose the most accurate adviser. Do participants choose the high-accuracy adviser (`the Expert'), or the low-accuracy one (`the Charlatan'), whose answers are designed to be similar to the modal participant's priors? Our participants overwhelmingly choose the Charlatan, and this is only slowly and partially reversed with sequential feedback on the correct answer. We develop Bayesian models to determine optimal choice benchmarks, but find that behaviour is best explained by a naive choice model akin to reinforcement learning with high inertia
    Keywords: Democracy, Economic Literacy, Expert Advice, Populism
    JEL: C91 A11
    Date: 2020–07
  2. By: Laura Hueber; Rene Schwaiger
    Abstract: We introduce a training intervention based on a novel tool to mitigate behavior consistent with myopic loss aversion (MLA). We present the results of a large-scale online experiment with 894 student participants. The study featured a two-step debiasing training intervention based on experience sampling and a subsequent elicitation of MLA. We found that participants at baseline exhibit behavior consistent with MLA, which was not the case for decisionmakers who underwent the debiasing training intervention. Nonetheless, we found no statistically significant difference-in-difference effect of the training intervention on the magnitude of MLA. However, when we focused on the more attentive participants by excluding participants with the 10% longest and 10% shortest processing times on the task relevant instruction screens, the magnitude of the difference-in-difference effect of the training intervention increased strongly and became statistically significant when controlling for age, gender, education, field of study, investment experience, and financial risk preferences.
    Keywords: online experiment, myopic loss aversion, debiasing, experience sampling
    JEL: G11 G41 G51
    Date: 2021–01
  3. By: Schlicht, Ekkehart
    Abstract: For non-economists, it is often difficult to understand why economists place so much emphasis on the self-interest motive. It is obvious that people act out of a variety of motives - gratitude, anger, social obligation and many, many other motives. There are several reasons why economists still put the self-interest motive in the foreground. Three points of view seem particularly important: - homo economicus as a useful approximation - homo economicus as an ideal type - homo oeconomicus as as-if construction These justifications for the self-interest or homo-economicus assumption are briefly characterized.. It is explained why these justifications cannot be empirically disproved. Only their relevance can be questioned. Subsequently, the evolutionary point of view that underlies the as-if defense of homo economicus is radicalized and it is argued that it is appropriate to approach norm formation theoretically and experimentally from a psychological point of view.
    Keywords: behavioral economics; rational choice; evolutionary economics; anomalies; bounded rationality; institutional economics; norm erosion
    JEL: D9 B13 B15 D01
    Date: 2020
  4. By: TURKEŠ, Renata; SÖRENSEN, Kenneth; PALHAZI CUERVO, Daniel
    Abstract: In this paper,we investigate the factors that have an impact on the choice of facility configuration for inventory pre-positioning in preparation for emergencies - a critical decision faced by humanitarian managers. Current research in the field is rich with mathematical models and solution algorithms for the problem of pre-positioning emergency supplies. However, due to a lack of a strong mathematical background and/or computational infrastructure, the decision makers rely on simpler rules of thumb to guide their planning. Some managerial implications have been offered in the literature, but these have been derived from sensitivity analyses focused on a single factor and using a single case study, and as such can be misleading as they ignore important interactions between many instance characteristics. We carried out a large experimental study that analyses the effect of different instance characteristics and their interactions on the facility decision making. On the one hand, the outcomes of the study help us identify the most important factors and factor interactions that are further used to yield policy recommendations for facility planning. On the other hand, this study also demonstrates the extent of erroneousness of the guidelines derived from simple analyses, and as such hopefully promotes better experimental designs in the field of humanitarian logistics.
    Date: 2020–03

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