nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2022‒04‒18
eight papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Lie O'Clock: Experimental Evidence on Intertemporal Lying Preferences By Georgia Michailidou; Hande Erkut
  2. Can moral reminders curb corruption? Evidence from an online classroom experiment By Claus, Corinna; Köhler, Ekkehard A.; Krieger, Tim
  3. Attitudes towards success and failure By Larbi Alaoui; Antonio Penta
  4. Behavioral Insights in Infrastructure Sectors: A Survey By George Joseph; Sophie Ayling; Pepita Miquel-Florensa; Hernán D. Bejarano; Alejandra Quevedo Cardona
  5. Motivated Reasoning, Information Avoidance, and Default Bias By Katharina Momsen; Sebastian O. Schneider
  6. Rituals of Reason By Elias Bouacida; Renaud Foucart
  7. Fairness in times of crisis: Negative shocks, relative income and preferences for redistribution By Anna Hochleitner
  8. Does deliberation decrease belief in conspiracies? By Bago, Bence; Rand, David; Pennycook, Gordon

  1. By: Georgia Michailidou; Hande Erkut (Division of Social Science)
    Abstract: In lying utility models, benefits and costs typically occur presently and simultaneously. However, lying and its products often develop asynchronously. To evaluate how these asynchronies affect the psychological costs of lying, we develop an experiment in which lying decisions occur presently, while externalities (external costs) and observability (internal costs) occur in future temporal brackets. To assess if lying costs or social preferences drive our findings, we compare against a baseline in which lying opportunities become simple distributive choices. We report significant behavioral differences when outcomes occur as products of lying rather than distributive choices which suggests that lying, per se, begets distinct psychological costs. Further, the results from exponential and quasi-hyperbolic discounting estimations suggest that temporally distancing antisocial decision-making from its consequences dilutes the associated psychological costs. External psychological costs caused by lying are discounted less and are subject to milder present-bias compared to those produced by distributive choices while manipulating internal psychological costs via observability attenuates discounting and present-bias in both cases.
    Date: 2022–04
  2. By: Claus, Corinna; Köhler, Ekkehard A.; Krieger, Tim
    Abstract: Using an incentivized online classroom experiment, we assess the effectiveness of deontological vs. consequentialist moral reminders. Participants were told that they are the responsible public servant for acquiring a Covid-19 vaccine, providing them with the opportunity to generate some extra private income by accepting a bribe. Our findings indicate that a deontological moral reminder ("corruption is immoral") leads to a significant reduction in accepting bribes. A consequentialist moral reminder, pointing out that bribes are costly to taxpayers, shows no significant effect. Furthermore, we do not find any empirical support that male participants are more corrupt in comparison to female participants. Students majoring in economics or business/management show more corrupt behavior than students studying to become economics school teachers, but the difference is not statistically significant. A person's disposition towards risk appears to have a strong dissuading effects. Our experiment was conducted before and after the unexpected announcement by pharmaceutical companies BioNTech and Pfizer on November 9th, 2020, that they will be able to provide an effective Covid-19 vaccine. This announcement does not correlate with a changed level of bribe-taking.
    Keywords: Moral Reminder,Ethics,Corruption,Dishonesty,Economics Students,Experiment,Covid-19
    JEL: A20 C91 D73 H12 I20
    Date: 2022
  3. By: Larbi Alaoui; Antonio Penta
    Abstract: Individuals often attach a special meaning to obtaining a certain goal, and getting past a threshold marks the difference between what they consider a success or a failure. In this paper we take a standard von Neumann-Morgenstern Expected Utility setting with an exogenous reference point that separates success from failure, and define attitudes towards success and failure as features of preferences over lotteries. The distinctive feature of our definitions is that they all concern a local reversal of the decision maker's risk attitude between riskaversion and risk-lovingness across the reference point. Our findings provide a unified view of several well-known models of reference-dependent preferences in economics, finance and psychology, and also include novel representations. Moreover, we introduce orderings over the primitive space of preferences to define different attitudes with which each attitudes can be displayed, and characterize them in terms of the representation, with indices analogous to the well-known Arrow-Pratt index of risk aversion. Our findings shed new light on frequently used notions of reference-dependent preferences, and suggest that new comparative statics analyses be conducted in these settings. Finally, we argue that our framework may prove useful to incorporate, within a standard economic model, behavioral manifestations of personality traits that have received increasing attention within the empirical economics literature.
    Keywords: Expected utility; loss aversion; aspirations; risk aversion; reference-dependence
    JEL: D01 D81
    Date: 2022–03
  4. By: George Joseph (World Bank); Sophie Ayling (World Bank); Pepita Miquel-Florensa (Toulouse School of Economics); Hernán D. Bejarano (CIDE); Alejandra Quevedo Cardona ((World Bank/Institut Barcelona d’Estudis Internacionals)
    Abstract: In the past two decades, insights from behavioral sciences, particularly behavioral economics, have been widely applied in the design of social programs such as pensions, social security, and taxation. This paper provides a survey of the existing literature in economics on the application of behavioral insights to infrastructure sectors, focusing on water and energy. Various applications of behavioral insights in the literature are examined from the perspectives of the three main actors in the infrastructure sectors: policy makers, service providers, and consumers. Evidence is presented from the literature on how behavioral regularities, such as imperfect optimization, limited selfcontrol, and nonstandard preferences, affect the strategies, decisions, and actions of policy makers, service providers, and consumers, often leading to suboptimal outcomes for service investment, delivery, access, and use. The paper also highlights how behavioral interventions such as anchoring, framing, nonpecuniary incentives, and altering the choice architecture can lead to improvements in performance, adoption, consumption, and other outcomes of interest in the infrastructure sectors.
    Keywords: Micro-based Behavioral Economics; Publicly Provided Goods, Water, Energy, Infrastructure, Development Planning and Policy
    JEL: D9 H4 O21 Q4
    Date: 2022–02
  5. By: Katharina Momsen (University of Innsbruck); Sebastian O. Schneider (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: We investigate whether the presence of a default interacts with the willingness of decision-makers to gather, process and consider information. In an online experiment, where about 2,300 participants choose between two compiled charity donation options worth $100, we vary the availability of information and the presence of a default. Information avoidance, when possible, increases default effects considerably, manifesting a hitherto undocumented channel of the default bias. Moreover, we show that defaults trigger motivated reasoning: In the presence of a default – even if self-selected–, participants consider new information to a lower degree than without a preselected option.
    Keywords: Motivated reasoning, information avoidance, defaults, status quo, charitable giving, experiment
    JEL: C90 D64 D83 D91
    Date: 2022–04–06
  6. By: Elias Bouacida; Renaud Foucart
    Abstract: We study revealed preferences towards the use of random procedures in allocation mechanisms. We report the results of an experiment in which subjects vote on a procedure to allocate a reward to half of them. The first possibility is an explicitly random device: the result of a lottery. The second is either an unpredictable procedure they could interpret as meritocratic, or one that is obviously arbitrary. We run all treatments with and without control. We identify an aversion to lotteries and clearly arbitrary procedures across treatments, even though, on aggregate, subjects do not believe any procedure to give them a higher probability of success and there is no correlation between beliefs and outcomes. In line with the literature, we also find evidence of a control premium in most procedures.
    Keywords: lotteries, mechanism design, allocation problems, procedures, tiebreaking rule
    JEL: D01 D78 D91
    Date: 2022
  7. By: Anna Hochleitner (University of Nottingham)
    Abstract: While economic crises tend to raise questions about a fair distribution of resources, less is known about whether and how fairness views themselves are affected by negative shocks. To answer this question, I conduct two experimental studies investigating the causal link between income shocks and preferences for redistribution. While Study 1 exogenously manipulates within experiment shocks, Study 2 capitalises on the recent Covid-19 crisis and investigates the behaviour of subjects hit by real world income shocks. The results from Study 1 show that allocation decisions as well as reactions to shocks depend on participants' relative income. Participants who are relatively poorer exhibit little reaction to shocks and distribute resources in line with an egalitarian fairness view. Participants who are relatively richer, by contrast, distribute resources proportionate to individual contributions and are quite responsive to shocks. They allocate more to themselves if they suffered a shock, but less if the other faced a shock. Study 2 confirms that negative shocks affect redistributive preferences with participants allocating more to individuals who suffered the Covid-19 shock. The results contribute to a growing literature on context-dependent preferences and show that economic shocks can have a substantial impact on the demand and acceptance of redistributive policies.
    Keywords: Redistribution, Inequality, Fairness, Laboratory-Individual Behavior
    Date: 2022–08
  8. By: Bago, Bence; Rand, David; Pennycook, Gordon
    Abstract: What are the underlying cognitive mechanisms that support belief in conspiracies? Common dual-process perspectives suggest that deliberation helps people make more accurate decisions and decreases belief in conspiracy theories that have been proven wrong (therefore, bringing people closer to objective accuracy). However, evidence for this stance is i) mostly correlational and ii) existing causal evidence might be influenced by experimental demand effects and/or a lack of suitable control conditions. Furthermore, recent work has found that analytic thinking tends to increase the coherence between prior beliefs and new information, which may not always lead to accurate conclusions. In two studies, participants were asked to evaluate the strength of conspiratorial (or non-conspiratorial) explanations of events. In the first study, which used well-known conspiracy theories, deliberation had no effect. In the second study, which used relatively unknown conspiracy theories, we found that experimentally manipulating deliberation did increase belief accuracy - but only among people with a strong ‘anti-conspiracy’ or strong ‘pro-conspiracy’ mindset from the outset, and not among those with an intermediate conspiratorial mindset. Although these results generally support the idea that encouraging people to deliberate can help to counter the growth of novel conspiracy theories, they also indicate that the effect of deliberation on conspiratorial beliefs is more complicated than previously thought.
    Date: 2022–03–28

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