nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2023‒01‒16
six papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Norm-signalling punishment By Daniele Nosenzo; Erte Xiao; Nina Xue
  2. Memory Recall Bias of Overconfident and Underconfident Individuals after Feedback By King-King Li
  3. The endowment effect in the general population By Fehr, Dietmar; Kübler, Dorothea
  4. On the Development of Cooperative and Antagonistic Relationships in Public Good Environments. A Model-Based Experimental Study By Loerakker, Ben; Bault, Nadège; Hoyer, Maximilian; van Winden, Frans
  5. Policy Responses, Social Norms, and Behavior Change in the Time of Covid-19 By Amira El-Shal; Eman Moustafa
  6. Diminishing Returns: Nudging Covid-19 Prevention Among Colombian Young Adults By Blackman, Allen; Hoffmann, Bridget

  1. By: Daniele Nosenzo (Aarhus Univeristy, Denmark); Erte Xiao (Department of Economics, Monash University); Nina Xue (Department of Economics, Monash University)
    Abstract: The literature on punishment and prosocial behavior has presented conflicting findings. In some settings, punishment crowds out prosocial behavior and backfires; in others, however, it promotes prosociality. We examine whether the punisher’s motives can help reconcile these results through a novel experiment in which the agent’s outcomes are identical in two environments, but in one punishment is self-serving (i.e., potentially benefits the punisher) while in the other it is other-regarding (i.e., potentially benefits a third party). We find that self-regarding punishment reduces the social stigma of selfish behavior, while other-regarding punishment does not. As a result, self-serving punishment is less effective at encouraging compliance and is more likely to backfire compared to other-regarding punishment. Our findings have implications for the design of punishment mechanisms and highlight the importance of the punisher’s motives in the norm-signalling function of punishment.
    Keywords: punishment, norms, stigma, crowd out, experiment
    JEL: D02
    Date: 2022–12
  2. By: King-King Li (Shenzhen Audencia Business School, Shenzhen University)
    Abstract: We experimentally investigate the memory recall bias of overconfident (underconfident) individuals after receiving feedback on their overconfidence (underconfidence). Our study differs from the literature by identifying the recall pattern conditional on subjects' overconfidence/underconfidence. We obtain the following results. First, overconfident (underconfident) subjects exhibit overconfident (underconfident) recall despite receiving feedback on their overconfidence (underconfidence). Second, awareness of one's overconfidence or underconfidence does not eliminate memory recall bias. Third, the primacy effect is stronger than the recency effect. Overall, our results suggest that memory recall bias is mainly due to motivated beliefs of sophisticated decision makers rather than naïve decision-making.
    Keywords: memory recall bias, overconfidence, underconfidence, experiment
    Date: 2022–05–23
  3. By: Fehr, Dietmar; Kübler, Dorothea
    Abstract: We study the endowment effect and expectation-based reference points in the field leveraging the setup of the Socio-Economic Panel. Households receive a small item for taking part in the panel, and we randomly assign respondents either a towel or a notebook, which they can exchange at the end of the interview. We observe a trading rate of 32 percent, consistent with an endowment effect, but no relationship with loss aversion. Manipulating expectations of the exchange opportunity, we find no support for expectation-based reference points. However, trading predicts residential mobility and is related to stock-market participation, i.e., economic decisions that entail parting with existing resources.
    Keywords: exchange asymmetry, reference-dependent preferences, loss aversion, fieldexperiment, SOEP
    JEL: C93 D84 D91
    Date: 2022
  4. By: Loerakker, Ben; Bault, Nadège (University of Plymouth); Hoyer, Maximilian; van Winden, Frans
    Abstract: The importance of prosocial behavior is currently widely acknowledged. This not only holds for the social sciences, including economics, but also the life sciences where this kind of behavior is observed across the evolutionary ladder. Evolutionary continuity consequently suggests that caring for others may be due to both strategic motivations, based on deliberation and reasoning, and more impulsive (affective) non-strategic motivations, in line with the two major mental systems distinguished by Kahneman (2011). This study estimates and applies a dynamic affective-ties model, allowing for strategic behavior, on a novel experimental data set to investigate four underexplored issues regarding public good environments. First, do negative (antagonistic) relationships as well as positive (cooperative) relationships develop in a public good game environment once equal space is given for their development? Second, do people react differently to the positive versus negative behavior of others in such an environment? Third, does the affective-ties model outperform other relevant models in a proper out-of-sample prediction horse race regarding the same game? Fourth, is this model helpful in explaining behavior across different contexts? Our results provide a clear yes to each of these four questions. Negative relationships do develop, but seem less stable than positive relationships in the long run; people appear to react more strongly to the positive compared to the negative behavior of others; our estimated (two parameter) model outperforms other models; and our model helps explain why and how people switch behavioral rules (like tit-for-tat) as the parameters of a repeated prisoner’s dilemma game change.
    Date: 2022–12–05
  5. By: Amira El-Shal (Cairo University); Eman Moustafa (General Authority for Investment & Free Zones)
    Abstract: Inducing behavior change is a missing factor in the face of viral threats. Using a difference-indifferences fixed-effects strategy, we estimate the effects of government containment, closure, and economic policy responses to COVID-19 on changes in human mobility behavior in 132 countries, while accounting for the disease risk and the public perception of this risk. We also show how social norms, namely risk taking, patience, and trust, can explain the heterogenous effects of policy responses on behavior change. Our estimates indicate that the stringency of containment and closure policies decreases human mobility. Economic policies lead to a less significant decline. Stronger adjustment in the public mobility behavior originates from their risk perception rather than being policy induced. Examining behavioral heterogeneity, we find that risk averse populations and who exhibit more patience pre act and lower their mobility independent of public policies. Economic support triggers negative behavior change in high time-preference settings, where we observe increased mobility, contrary to where populations are more patient. Risk communication elicits positive behavior change among risk-averse and impatient populations, who reduced their mobility. This effect varies by trust in politicians.
    Date: 2021–10–20
  6. By: Blackman, Allen; Hoffmann, Bridget
    Abstract: Until a vaccine is widely available, face masks and other nonpharmaceutical interventions (NPIs) will continue to be the frontline defense against Covid-19 in developing countries. But their effectiveness depends critically on compliance by young adults, who are most likely both to become infected and to infect others. We conducted a randomized controlled trial in Bogotá, Colombia, to assess the effectiveness of informational nudges on university students concern about Covid-19, recent compliance with NPI recommendations, and intended future compliance. Although nudges boosted concern, they had limited effects on either recent or intended future compliance. We attribute these null results to high baseline levels of information about and compliance with NPIs an informational diminishing returns scenario that is likely to be increasingly common globally. Nudges were more effective at boosting recent compliance among participants who were politically left-wing, were relatively poor, and lived with more people.
    Keywords: behavioral economics;framing;Coronavirus;HEALTH BEHAVIOR;nonpharmaceutical intervention;randomized controlled trial
    JEL: D83 O10 I18 I1 I15 D8
    Date: 2021–05

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