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on Cognitive and Behavioural Economics |
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Issue of 2022‒12‒12
six papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Michał Krawczyk (University of Warsaw, Faculty of Economic Sciences); Joanna Rachubik (University of Warsaw, Faculty of Economic Sciences,) |
| Abstract: | The representativeness heuristic (RH) proposes that people expect even a small sample to have similar characteristics to its parent population. One domain in which it appears to operate is the preference for combinations of numbers on lottery tickets: most players seem to avoid very characteristic, “unrepresentative” combinations, e.g., only containing very low numbers. Likewise, many players may avoid betting on a recently drawn combination because it would seem particularly improbable to be drawn again. We confirm both of these tendencies in a lab experiment and corroborate their external validity in two field experiments. However, we only find a weak link between these two choices: the same people do not necessarily exhibit the two biases. In this sense, there is little consistent manifestation of the RH across different tasks at the individual level. Nevertheless, there are some links related to rationality across the two choices – people who are willing to forgo a monetary payment to get the preferred ticket in one task are also willing to do it in the other. We find such preferences to be related to the misperception of probabilities and providing intuitive, incorrect answers in the Cognitive Reflection Test. |
| Keywords: | Decision making under risk, Lottery choice, Perception of randomness, Number preferences in lotteries, Representativeness heuristic |
| JEL: | C93 D01 D81 D91 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2021-24&r=cbe |
| By: | Jean-Marc Bourgeon; José De Sousa; Alexis Noir-Luhalwe |
| Abstract: | We examine the risky choices of pairs of contestants in a popular radio game show in France. At one point during the COVID-19 pandemic the show, held in person, had to switch to an all-remote format. We find that such an exogenous change in social context affected risk-taking behavior. Remotely, pairs take far fewer risks when the stakes are high than in the flesh. This behavioral difference is consistent with prosocial behavior theories, which argue that the nature of social interactions influences risky choices. Our results suggest that working from home may reduce participation in profitable but risky team projects. |
| Keywords: | COVID-19, social distancing, social pressure, decision making, risk |
| JEL: | C93 D81 D91 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10063&r=cbe |
| By: | Mantilla, Cesar; Gelvez Ferreira, Juan David Gelvez; Nieto, Maria Paula |
| Abstract: | The increasing lack of trust in the police around the globe reduces their indirect benefits, related to citizens' feelings of safety and beliefs that the police are "doing something'' to fight crime. We explore whether this generalized lack of trust among citizens correlates with their beliefs' accuracy regarding fairness norm enforcement in a lab-in-the-field experiment conducted with future police officers. Two hundred nine police students played a dictator-like game with costly third-party reallocation. Participants acting as a third party could use one-fourth of their endowment to either decrease (i.e., sanction) or increase (i.e., reward) the highest payoff among the two other players, the initial allocator and the transfer's recipient. We randomized whether a police student or a civilian was the recipient. Police students transfer roughly 40% of their endowment, regardless of the recipient's identity. They are likely to incur costly reallocations between 55 and 75 percent of the time, especially when initial allocations are more inegalitarian and the recipient is also a police student. Moreover, when police students interact only with in-group members, they are more likely to reward, whereas they are more likely to sanction if the transfer's recipient is a civilian. The subsequent prediction survey, conducted with over 200 civilians, reveals that respondents expected some in-group favoritism in the transfer and in the likelihood to reward. Although the probability of sanctioning was high, respondents overestimated the likelihood that police students engage in costly sanctions. Incentives and reporting a higher trust in the police are correlated with higher predictive accuracy. |
| Date: | 2022–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:aebxy&r=cbe |
| By: | Drobner, Christoph (Technical University of Munich); Goerg, Sebastian J. (Technische Universität München) |
| Abstract: | We study belief updating about relative performance in an ego-relevant task. Manipulating the perceived ego-relevance of the task, we show that subjects update their beliefs optimistically because they derive direct utility flows from holding positive beliefs. This finding provides a behavioral explanation why and how overconfidence can evolve in the presence of objective information. Moreover, we document that subjects, who received more bad signals, downplay the ego-relevance of the task. Taken together, these findings suggest that subjects use two alternative strategies to protect their ego when presented with objective information. |
| Keywords: | motivated beliefs, optimistic belief updating, overconfidence, direct belief utility, Bayes' rule, ex-post rationalization |
| JEL: | C91 D83 D84 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15682&r=cbe |
| By: | Fellnhofer, Katharina (ETH Zürich); Sornette, Didier |
| Abstract: | Research proposal to tackle following research questions: To what extend is unconscious intuitive decision-making in complex and uncertain conditions more accurate than conscious analytical decision-making? Is – paradoxically – analytical thinking more successful when making simple decisions and intuitive thinking when deciding in complex environments? |
| Date: | 2022–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:evjd6&r=cbe |
| By: | Kaiser, Tim; Menkhoff, Lukas; Oberrauch, Luis |
| Abstract: | We study the malleability of patience via educational interventions by aggregating evidence from earlier experiments in a meta-analysis and by conducting a field experiment. We find that the average effect of interventions on patience is positive but uncertain. The age of students explains a large share of between-study heterogeneity in treatment effects. Thus, we conduct a field experiment covering both youths and adults in Uganda. We find heterogenous effects by age: adults’ patience measured in incentivized tasks is unaffected by the intervention after 15 months follow-up, but we observe large effects on patience and estimated discount factors for youth. |
| Keywords: | Patience,time-preferences,malleability,field experiment,educational intervention |
| JEL: | C93 I21 D15 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:266080&r=cbe |