nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2022‒05‒30
ten papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Meta-Nudging Honesty: Past, Present, and Future of the Research Frontier By Eugen Dimant; Shaul Shalvi
  2. Should Individuals Choose Their Own Incentives? Evidence from a Mindfulness Meditation Intervention By Andrej Woerner; Giorgia Romagnoli; Birgit M. Probst; Nina Bartmann; Jonathan N. Cloughesy; Jan Willem Lindemans
  3. What works best in promoting climate citizenship? A randomised, systematic evaluation of nudge, think, boost and nudge+ By Banerjee, Sanchayan; Galizzi, Matteo M.; John, Peter; Mourato, Susana
  4. Altruism Begets Altruism By Stephanie A. Heger; Robert Slonim
  5. Nudging To Prohibition? A Reassessment of Irving Firsher’s Economics of Prohibition in Light of Modern Behavioral Economics By Curott, Nicholas A.; Snow, Nicholas A.
  6. Instability of preferences due to Covid-19 Crisis and emotions: a natural experiment from urban Burkina Faso By Delphine Boutin; Laurène Petifour; Haris Megzari
  7. Cognitive behavior therapy reduces crime and violence over 10 years: Experimental evidence By Christopher Blattman; Sebastian Chaskel; Julian C. Jamison; Margaret Sheridan
  8. Can Wishful Thinking Explain Evidence for Overconfidence? An Experiment on Belief Updating By Uri Gneezy; Moshe Hoffman; Mark A. Lane; John List; Jeffrey Livingston; Michael J. Seiler
  9. On the Generalizability of Using Mobile Devices to Conduct Economic Experiments By Yiting Guo; Jason Shachat; Matthew J. Walker; Lijia Wei
  10. Leveraging the Honor Code: Public Goods Contributions under Oath By Jérôme Hergueux; Nicolas Jacquemet; Stéphane Luchini; Jason Shogren

  1. By: Eugen Dimant (University of Pennsylvania, CESifo, Munich); Shaul Shalvi (University of Amsterdam)
    Abstract: Achieving successful behavior change via nudging is hard. This is particularly true when choice architects attempt to change behavior that is collectively harmful but individually beneficial. In this paper, we review the state-of-the-art of the behavior change literature to assess both robust evidence on the motives for lying and promising interventions to curb lying. Existing literature points to combining simple behavioral interventions (e.g., norm-nudging) with interventions that contain pecuniary consequences (e.g., norm enforcement via punishment). In this context, we also discuss the idea of `meta-nudging': rather than pursuing the classical approach to nudge targeted behavior directly, one may instead want to nudge behavior indirectly by targeting those who are in positions of power and have the ability to enforce norm adherence of others. Research suggests that delegating the enforcement of norm prescriptions can be a promising approach to nudge honesty.
    Keywords: Behavior Change, Honesty, Lying, Nudging
    JEL: C9 D01 D9
    Date: 2022–05
  2. By: Andrej Woerner; Giorgia Romagnoli; Birgit M. Probst; Nina Bartmann; Jonathan N. Cloughesy; Jan Willem Lindemans
    Abstract: This paper theoretically and empirically investigates the effects of letting people choose from a menu of increasingly challenging incentive schemes. We derive the conditions under which a policy maker profits from leaving the choice to the individuals by leveraging their private information about the expected benefits from the targeted behavior. We test the theoretical predictions in a field experiment in which we pay participants monetary rewards for completing daily meditation sessions. We randomly assign some participants to one of two incentive schemes and allow others to choose between the two schemes. As predicted, participants sort into schemes in (partial) agreement with the objectives of the policy maker. In contrast to our theoretical predictions, participants who could choose complete significantly fewer meditation sessions than participants that were randomly assigned. Since the results are not driven by poor selection, we infer that letting people choose between incentive schemes may bring in psychological effects that discourage adherence.
    Keywords: monetary incentives, dynamic incentives, field experiment, mental health
    JEL: C90 D03 D80 I10
    Date: 2021
  3. By: Banerjee, Sanchayan; Galizzi, Matteo M.; John, Peter; Mourato, Susana
    Abstract: Nudges have been increasingly deployed to deliver climate policies in the last decade. Recent evidence shows nudges are hard to scale–up. So can we use nudges more effectively, or should we rely on other tools of behaviour change? We argue that reflective strategies can enhance nudges by encouraging agency and ownership in citizens. We test this by systematically comparing nudges to reflective interventions like thinks, boosts, and nudge+ over orders of low-carbon meals using an online experiment with 3,074 participants in the United Kingdom. We find all behavioural interventions increase intentions for climate-friendly diets, but encouraging reflection prior to nudging (“nudge+”) strengthens these treatment effects. There is no evidence of negative behavioural spillovers as measured by participants’ donations to pro-social charities. There is potential for reflective policies in promoting climate citizenship.
    Keywords: nudge; think; boost; nudge+; climate-friendly diets; climate citizenship; Department of Psychological and Behavioural Science; Department of Political Economy; Department of Geography and Environment
    JEL: C90 D91 I12 Q18 Q58
    Date: 2022–04
  4. By: Stephanie A. Heger; Robert Slonim
    Abstract: Guided by Bem’s (1972) self-perception theory, we design an experiment to ask whether morally-motivated behaviour, e.g., charitable giving, is history-dependent. Using a popular policy nudge, the default option, we exogenously vary altruism “now” and show that giving “now” causes a 66%- 200% increase in the probability of giving “later”; that is, altruism begets altruism. We further show that, consistent with self-perception theory, the choice to behave altruistically “now”, rather than the nudge itself, is the crucial element in the causal relationship. These findings are consistent with a model of positive path-dependence, which we interpret as moral consistency.
    Keywords: altruism, nudge, moral consistency
    Date: 2022
  5. By: Curott, Nicholas A.; Snow, Nicholas A.
    Abstract: In this paper we argue that Irving Fisher (1867-1947) is an unacknowledged pioneer of modern behavioral economics. Fisher’s behavioralist orientation is evident in his writings on alcohol prohibition. In these works, Fisher argued that behavioral anomalies prevent individuals from making rational choices regarding alcohol consumption. Fisher thought these anomalies arose from three sources: 1) incomplete information; 2) limited cognitive abilities; and 3) lack of will power. These are essentially the same barriers to rational choice identified by modern day New Paternalists. Therefore, we argue that Fisher’s work on Prohibition was a pioneering academic achievement that anticipated recent developments in economics, and not an unscientific diatribe, as previous commentators have presumed. Unlike modern day ‘New Paternalists,’ however, Fisher rejected minor alterations to the choice architecture and advocated outright prohibition instead. This helps to illustrate a potential slippery slope problem with modern new paternalist arguments that should be addressed.
    Date: 2022–04–09
  6. By: Delphine Boutin (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Laurène Petifour; Haris Megzari (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The salience of the first Covid-19 crisis over a well-identified period represents an unexpected and abrupt change in the environment. This study uses the onset of the Covid-19 crisis to empirically examine whether risk and time preferences change in response to this exogenous shock. We use an original panel dataset conducted in January 2020 (before any event) and June 2020 (after the removal of strong economic measures) among women working in the informal sector in Ouagadougou, Burkina Faso. We use individual fixed effects on a balanced panel of 853 women to isolate the specific causal effect of the Covid-19 crisis on variation in attitudes toward risk and time over these six months and rule out alternative explanations for differences in preferences. We demonstrate strong preference instability: risk aversion changed over the period in both the gain (13%) and loss (-47%) domains, while impatience increased by 9%. We also show that risk aversion (in both domains) is non-sensitive to actual impacts, but appears to be driven by economic fears and concerns related to the Covid-19 crisis. We also find that greater exposure to the media reinforces preference instability: the more informed the respondent is, the more their risk and time preferences vary. The same phenomenon is observed when their source of information comes from the government or from a social network (Facebook and WhatsApp).
    Keywords: Covid-19,Risk attitude,Impatience,Emotions,Media exposure
    Date: 2022–03–29
  7. By: Christopher Blattman (Department of Political Science, University of Chicago); Sebastian Chaskel (Instiglio); Julian C. Jamison (Department of Economics, University of Exeter); Margaret Sheridan (Department of Psychology and Neuroscience, University of North Carolina)
    Abstract: In most societies, a small number of people commit most of the serious crimes and violence. Short-term studies have shown that cognitive behavioral therapy (CBT) can reduce such antisocial behaviors. There are some signs that these behavior changes may be temporary, however, especially from therapy on its own. This is unsettled, however, for there has been little randomized and long-term research on the question. We follow 999 high-risk men in Liberia 10 years after randomization into one of four arms: 8 weeks of a low-cost therapy; a $200 cash grant; both therapy and cash; or a control group. Together, the two interventions cost just $530 to deliver. We find that, a decade later, both therapy alone and therapy with economic assistance produce dramatic reductions in antisocial behaviors. Reported drug-selling and participation in thefts and robberies, for example, fall by about half. These impacts are greatest among the very highest-risk men. The effects of therapy alone, however, are somewhat smaller and more fragile. The effects of therapy plus economic assistance are more sustained and precise. Since the cash did not increase earnings for more than a few months after the grants, we hypothesize that the grant, and those few months of legitimate business activity, reinforced the learning-by-doing and habit formation embodied in CBT. Overall, the results suggest that highly-targeted CBT plus economic assistance could be an inexpensive and effective way to prevent violence, especially when policymakers are searching for alternatives to aggressive policing and incarceration.
    Keywords: cognitive behavior therapy, cash transfers, crime, violence, mental health, Africa, field experiments
    JEL: K42 O15 O17 D83
    Date: 2022–05–11
  8. By: Uri Gneezy; Moshe Hoffman; Mark A. Lane; John List; Jeffrey Livingston; Michael J. Seiler
    Abstract: Recent theoretical work shows that the better-than-average effect, where a majority believes their ability to be better than average, can be perfectly consistent with Bayesian updating. However, later experiments that account for this theoretical advance still find behavior consistent with overconfidence. The literature notes that overoptimism can be caused by either overconfidence (optimism about performance), wishful thinking (optimism about outcomes), or both. To test whether the better-than-average effect might be explained by wishful thinking instead of overconfidence, we conduct an experiment that is similar to those used in the overconfidence literature, but removes performance as a potential channel. We find evidence that wishful thinking might explain overconfidence only among the most optimistic subjects, and that conservatism is possibly more of a worry; if unaccounted for, overconfidence might be underestimated.
    Date: 2022
  9. By: Yiting Guo (Economics & Management School, Wuhan University); Jason Shachat (Durham University); Matthew J. Walker (Newcastle University Business School); Lijia Wei (Wuhan University)
    Abstract: Recent technological advances enable the implementation of online, field and hybrid experiments using mobile devices. Mobile devices enable sampling of incentivized decisions in more representative samples, consequently increasing the generalizability of results. Generalizability might be compromised, however, if the device is a relevant behavioural confound. This paper reports on a battery of common economic games and decision-making tasks in which we systematically randomize the decision-making device (computer versus mobile phone) and the laboratory setup (physical versus online). The results offer broad support for conducting decision experiments using mobile devices. For six out of eight tasks, we find robust null results in terms of average treatment effects and variability. This should give researchers confidence to conduct studies out-of-laboratory via mobile phones. However, we find two caveats. First, with respect to decisions, subjects using a mobile phone are significantly more risk averse and offer less during bargaining. Second, decision response times and the time taken to read instructions are significantly shorter for the online-mobile treatment. These caveats suggest the importance of ensuring device consistency across treatments in the digital age of experimentation.
    Keywords: mobile phone, digitization, methodology, experiment, generalizability
    JEL: C90 C93 C70
    Date: 2022
  10. By: Jérôme Hergueux (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Nicolas Jacquemet (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stéphane Luchini (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Jason Shogren (UW - University of Wyoming)
    Abstract: Public good games are at the core of many environmental challenges. In such social dilemmas, a large share of people endorse the norm of reciprocity. A growing literature complements this finding with the observation that many players exhibit a self-serving bias in reciprocation: "weak reciprocators" increase their contributions as a function of the effort level of the other players, but less than proportionally. In this paper, we build upon a growing literature on truth-telling to argue that weak reciprocity might be best conceived not as a preference, but rather as a symptom of an internal trade-off at the player level between (i) the truthful revelation of their private reciprocal preference, and (ii) the economic incentives they face (which foster free-riding). In truth-telling experiments, many players misrepresent private information when this is to their material benefit, but to a significantly lesser extent than what would be expected based on the profit-maximizing strategy. We apply this behavioral insight to strategic situations, and test whether the preference revelation properties of the classic voluntary contribution game can be improved by offering players the possibility to sign a classic truth-telling oath. Our results suggest that the honesty oath helps increase cooperation (by 33% in our experiment). Subjects under oath contribute in a way which is more consistent with (i) the contribution they expect from the other players and (ii) their normative views about the right contribution level. As a result, the distribution of social types elicited under oath differs from the one observed in the baseline: some free-riders, and many weak reciprocators, now behave as pure reciprocators.
    Keywords: Cooperation,Reciprocity,Social preferences,Public goods,Truth-telling oath
    Date: 2022–03

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