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

  1. Reciprocity or community: Different cultural pathways to cooperation and welfare By Anna Gunnthorsdottir; Palmar Thorsteinsson
  2. Making Up for Harming Others — An Experiment on Voluntary Compensation Behavior By Stehr, Frauke; Werner, Peter
  3. Learning Frames By Vessela Daskalova; Nicolaas J. Vriend
  4. Motivated belief updating and rationalization of information By Drobner, Christoph; Goerg, Sebastian J.
  5. The Dark Side of Monetary Bonuses: Theory and Experimental Evidence By Victor Gonzalez-Jimenez; Patricio S. Dalton; Charles N. Noussair

  1. By: Anna Gunnthorsdottir; Palmar Thorsteinsson
    Abstract: In a laboratory experiment we compare voluntary cooperation in Iceland and the US. We furthermore compare the associated thought processes across cultures. The two countries have similar economic performance, but survey measures show that they differ culturally. Our hypotheses are based on two such measures, The Inglehart cultural world map and the Knack and Keefers scale of civic attitudes toward large-scale societal functioning. We prime the participants with different social foci, emphasizing in one a narrow grouping and in the other a larger social unit. In each country we implement this using two different feedback treatments. Under group feedback, participants only know the contributions by the four members of their directly cooperating group. Under session feedback they are informed of the contributions within their group as well as by everyone else in the session. Under group feedback, cooperation levels do not differ between the two cultures. However, under session feedback cooperation levels increase in Iceland and decline in the US. Even when contribution levels are the same members of the two cultures differ in their motives to cooperate: Icelanders tend to cooperate unconditionally and US subjects conditionally. Our findings indicate that different cultures can achieve similar economic and societal performance through different cultural norms and suggest that cooperation should be encouraged through culturally tailored suasion tactics. We also find that some decision factors such as Inequity Aversion do not differ across the two countries, which raises the question whether they are human universals.
    Date: 2021–10
  2. By: Stehr, Frauke; Werner, Peter
    JEL: D91 D62 H41 Q58
    Date: 2021
  3. By: Vessela Daskalova; Nicolaas J. Vriend
    Abstract: Players may categorize the strategies available to them. In many games there are different ways to categorize one's strategies (different frames) and which ones players use has implications for the outcomes realized. This paper proposes a model of agents who learn which frames to use through reinforcement. As a case study we fit the model to existing experimental data from coordination games. The analysis shows that the model fits the data well as it matches the key stylized facts. It suggests a trade-off of using coarser versus finer representations of the strategy set when it comes to learning.
    Keywords: Variable frame theory; Coordination games; Categorization; Reinforcement learning; Focal points; Bounded rationality
    JEL: C63 C72 C91 D91
    Date: 2021–08
  4. By: Drobner, Christoph; Goerg, Sebastian J.
    Abstract: We study belief updating about relative performance in an ego-relevant task. Manipulating beliefs about the ego-relevance of the task, we show that subjects update their beliefs about relative performance more optimistically as direct belief utility increases. This finding provides clean evidence for the optimistic belief updating hypothesis and supports theoretical models with direct belief utility. Moreover, we document that subjects ex-post rationalize information by discounting their beliefs about the ego-relevance of the task as the number of bad signals increases. Taken together, these findings suggest that subjects use two alternative strategies to protect their ego despite the presence of objective information.
    Keywords: Motivated beliefs,Optimistic belief updating,Direct belief utility,Bayes' rule,Ex-post rationalization
    JEL: C91 D83 D84
    Date: 2021
  5. By: Victor Gonzalez-Jimenez; Patricio S. Dalton; Charles N. Noussair
    Abstract: To incentivize workers and boost performance, firms often offer monetary bonuses for the achievement of production goals. Such bonuses appeal to two types of motivations of the worker. On the one hand, the existence of a goal, on its own, triggers an intrinsic motivation associated with the desire to not fall short of the goal. On the other hand, the money paid to achieve the goal constitutes an extrinsic motivation. This paper studies the possibility that these two effects are substitutes when workers set their own goals. We develop a theoretical model that predicts that if the worker is sufficiently loss averse and faces uncertainty about reaching a production goal, offering a monetary payment contingent on reaching such a goal is counterproductive. This is because under the presence of monetary bonuses, the loss averse worker prefers setting lower goals, which yield lower but more likely bonus payments. Lower goals, in turn, negatively affect subsequent performance. Results from a laboratory experiment corroborate this prediction. This paper highlights the limits of monetary bonuses as an effective incentive when workers are loss averse.
    JEL: J41 D90 C91 D81
    Date: 2019–12

This nep-cbe issue is ©2021 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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