nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2022‒10‒31
six papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Eliciting Moral Preferences: Theory and Experiment By Roland Bénabou; Armin Falk; Luca Henkel; Jean Tirole
  2. The Welfare Economics of Reference Dependence By Daniel Reck; Arthur Seibold
  3. Can Grit Be Taught? Lessons from a Nationwide Field Experiment with Middle-School Students By Santos, Indhira; Petroska-Beska, Violeta; Carneiro, Pedro; Eskreis-Winkler, Lauren; Boudet, Ana Maria Munoz; Berniell, Ines; Krekel, Christian; Arias, Omar; Duckworth, Angela Lee
  4. When do reminders work? Memory constraints and medical adherence By Kai Barron; Mette Trier Damgaard; Christina Gravert
  5. Inside the NBA Bubble: How Black Players Performed Better without Fans By Caselli, Mauro; Falco, Paolo; Somekh, Babak
  6. Isolating nature from nurture: Does exposure to business and economics education make students more self-interested? By Sundemo, Mattias; Löfgren, Åsa

  1. By: Roland Bénabou (Princeton University); Armin Falk (Institute on Behavior and Inequality (briq) and University of Bonn); Luca Henkel (University of Bonn); Jean Tirole (University of Toulouse Capitole)
    Abstract: We study the extent to which a person’s moral preferences can be inferred from their choices, and how behaviors that appear deontologically motivated should be interpreted. Comparing direct elicitation (DE) and multiple-price list (MPL) mechanisms, we characterize how image motives inflate the extent of prosocial behavior. The resulting signalling bias is shown to depend on the interaction between elicitation method and visibility level: it is greater under DE for low reputation concerns, and greater under MPL for high ones. We test the model’s predictions in an experiment with life-saving donations and find the key crossing effect predicted by the theory.
    Keywords: Moral behavior, deontology, utilitarianism, consequentialism, social image, self-image, norms, preference elicitation, multiple price list, experiments
    JEL: C91 D01 D62 D64 D78
    Date: 2022–05
  2. By: Daniel Reck; Arthur Seibold
    Abstract: Empirical evidence suggests that individuals often evaluate options relative to a reference point, especially seeking to avoid losses. In this paper, we provide the first welfare analysis under reference-dependent preferences. We decompose the welfare impact of changes in reference points and prices into direct and behavioral effects, and describe how these effects depend on whether reference dependence reflects a bias or a normative preference. In a simple model of loss aversion grounded in common empirical findings, we find that lowering reference points robustly improves welfare, while the welfare effect of a price change depends critically on normative judgments. We also derive sufficient statistics characterizations of the welfare effects of changing reference points and prices. We illustrate these theoretical findings with an empirical application to reference dependence exhibited in German workers’ retirement decisions. Both simulation and sufficient statistics results suggest positive welfare effects of increasing the Normal Retirement Age, but ambiguous effects of financial incentives to postpone retirement. Finally, we study how adopting alternative models of reference dependent preferences modifies key welfare effects.
    Keywords: reference-dependent preferences, loss aversion, welfare, pension reform
    JEL: D91 D60 H55 J26
    Date: 2022
  3. By: Santos, Indhira (World Bank); Petroska-Beska, Violeta (University of SS. Cyril and Methodius); Carneiro, Pedro (University College London); Eskreis-Winkler, Lauren (Northwestern University); Boudet, Ana Maria Munoz (World Bank); Berniell, Ines (University of La Plata); Krekel, Christian (London School of Economics); Arias, Omar (World Bank); Duckworth, Angela Lee (University of Pennsylvania)
    Abstract: We study whether a particular socio-emotional skill – grit (the ability to sustain effort and interest towards long-term goals) – can be cultivated through a large-scale program, and how this affects student learning. Using a randomized control trial, we evaluate the first nationwide implementation of a low-cost intervention designed to foster grit and self- regulation among sixth and seventh-grade students in primary schools in North Macedonia (about 33,000 students across 350 schools). The results of this interventions are mixed. Exposed students report improvements in self-regulation, in particular the perseverance-of- effort facet of grit, relative to students in a control condition. Impacts on students are larger when both students and teachers are exposed to the curriculum than when only students are treated. For disadvantaged students, we also find positive impacts on grade point averages, with gains of up to 28 percent of a standard deviation one year post-treatment. However, while this intervention made students more perseverant and industrious, it reduced the consistency-of-interest facet of grit. This means that exposed students are less able to maintain consistent interests for long periods.
    Keywords: socio-emotional skills, grit, gpas, middle-school students, field experiment, RCT
    JEL: C93 D91 I20 I24
    Date: 2022–09
  4. By: Kai Barron (WZB Berlin); Mette Trier Damgaard (Department of Economics and Business Economics, CIBP & TrygFonden’s Centre for Child Research, Aarhus University); Christina Gravert (University of Copenhagen & CEBI)
    Abstract: An extensive literature shows that reminders can successfully change behavior. Yet, there exists substantial unexplained heterogeneity in their effectiveness, both: (i) across studies, and (ii) across individuals within a particular study. This paper investigates when and why reminders work. We develop a theoretical model that highlights three key mechanisms through which reminders may operate. To test the predictions of the model, we run a nationwide field experiment on medical adherence with over 4000 pregnant women in South Africa and document several key results. First, we find an extremely strong baseline demand for reminders. This demand increases after exposure to reminders, suggesting that individuals learn how valuable they are for freeing up memory resources. Second, stated adherence is increased by pure reminders and reminders containing a moral suasion component, but interestingly, reminders containing health information reduce adherence in our setting. Using a structural model, we show that heterogeneity in memory costs (or, equivalently, annoyance costs) is crucial for explaining the observed behavior.
    Keywords: Nudging, Reminders, Memory, Attention, Medication adherence, Structural model
    JEL: D04 D91 C93 I12
    Date: 2022–10–03
  5. By: Caselli, Mauro; Falco, Paolo; Somekh, Babak
    Abstract: In the NBA, predominantly Black players play in front of predominantly non-Black fans. Using the 'NBA bubble', a natural experiment induced by COVID-19, we show that the performance of Black players improved significantly with the absence of fans vis-à-vis White players. This is consistent with Black athletes being negatively affected by racist pressure from mostly non-Black audiences. We dispel several alternative hypotheses. Beyond hurting individual players, fans' behavior causes significant economic damage to the NBA by lowering the quality of the game.
    Keywords: discrimination,harassment,racism,performance,basketball,NBA,COVID-19
    JEL: D91 J15 J71 Z22
    Date: 2022
  6. By: Sundemo, Mattias (Department of Economics, School of Business, Economics and Law, Göteborg University); Löfgren, Åsa (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Does exposure to business and economics education make students more self-interested and less interested in a career that would contribute to a better society? Using a panel dataset of more than 900 individuals from a European Business School we are able to isolate the role of self-election from possible education or nurture-effects on prosocial (altruistic) values and attitudes associated with exposure to business and economics education. The school in this study, as well as many other contemporary business schools in this part of the world, have for many years integrated issues of sustainability, responsibility and ethics into their business and economics education. Still, after all these efforts, our results indicate that business and economics students become significantly less prosocial during their program studies, and importantly, we find no such effect among students from other disciplines. Further, we find that prosocial attitudes significantly correlate with prosocial behavior (measured by donation in an incentivized charity dictator game). We also provide evidence for highly heterogeneous effects with regards to majors (accounting, management, finance, economics etc.). Finally, we find notable and significant gender differences that largely persist throughout university education.
    Keywords: indoctrination; education; selection effect; economics education; business education; gender; prosociality; prosocial behavior; self-interest
    JEL: A22 D91 I23
    Date: 2022–10

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