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on Cognitive and Behavioural Economics |
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Issue of 2023‒02‒13
ten papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Yongping Bao; Ludwig Danwitz; Fabian Dvorak; Sebastian Fehrler; Lars Hornuf; Hsuan Yu Lin; Bettina von Helversen |
| Abstract: | Algorithm-based decision support systems play an increasingly important role in decisions involving exploration tasks, such as product searches, portfolio choices, and human resource procurement. These tasks often involve a trade-off between exploration and exploitation, which can be highly dependent on individual preferences. In an online experiment, we study whether the willingness of participants to follow the advice of a reinforcement learning algorithm depends on the fit between their own exploration preferences and the algorithm’s advice. We vary the weight that the algorithm places on exploration rather than exploitation, and model the participants’ decision-making processes using a learning model comparable to the algorithm’s. This allows us to measure the degree to which one’s willingness to accept the algorithm’s advice depends on the weight it places on exploration and on the similarity between the exploration tendencies of the algorithm and the participant. We find that the algorithm’s advice affects and improves participants’ choices in all treatments. However, the degree to which participants are willing to follow the advice depends heavily on the algorithm’s exploration tendency. Participants are more likely to follow an algorithm that is more exploitative than they are, possibly interpreting the algorithm’s relative consistency over time as a signal of expertise. Similarity between human choices and the algorithm’s recommendations does not increase humans’ willingness to follow the recommendations. Hence, our results suggest that the consistency of an algorithm’s recommendations over time is key to inducing people to follow algorithmic advice in exploration tasks. |
| Keywords: | algorithms, decision support systems, recommender systems, advice-taking, multi-armed bandit, search, exploration-exploitation, cognitive modeling |
| JEL: | C91 D83 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10188&r=cbe |
| By: | Hannah Schildberg-Hörisch; Marco A. Schwarz; Chi Trieu; Jana Willrodt; Marco Alexander Schwarz |
| Abstract: | Debates about affirmative action often revolve around fairness. Accordingly, we document substantial heterogeneity in the fairness perception of various affirmative action policies. But do these differences translate into different consequences? In a laboratory experiment, we study three different quota rules in tournaments that favor individuals whose performance is low, either due to discrimination, low productivity, or choice of a short working time. Affirmative action favoring discriminated individuals is perceived as fairest, followed by that targeting individuals with a short working time, while favoring low productivity individuals is not perceived as fairer than an absence of affirmative action. Higher fairness perceptions coincide with a higher willingness to compete and less retaliation against winners, underlining that fairness perceptions matter for the consequences of affirmative action. No policy harms overall productivity or post-competition teamwork, but affirmative action may reduce the average output of tournament winners. |
| Keywords: | affirmative action, fairness ideals, experiment, tournament, real effort |
| JEL: | C91 D02 D63 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10198&r=cbe |
| By: | Christoph Kuzmics; Brian W. Rogers; Xiannong Zhang |
| Abstract: | We design and implement lab experiments to evaluate the normative appeal of behavior arising from models of ambiguity-averse preferences. We report two main empirical findings. First, we demonstrate that behavior reflects an incomplete understanding of the problem, providing evidence that subjects do not act on the basis of preferences alone. Second, additional clarification of the decision making environment pushes subjects' choices in the direction of ambiguity aversion models, regardless of whether or not the choices are also consistent with subjective expected utility, supporting the position that subjects find such behavior normatively appealing. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.03304&r=cbe |
| By: | Ivan Soraperra; Joël van der Weele; Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Shaul Shalvi |
| Abstract: | We experimentally study the social transmission of \inconvenient" information about the externalities generated by one's own decision. In the laboratory, we pair uninformed decision makers with informed senders. Compared to a setting where subjects can choose their information directly, we find that social interactions increase selfi sh decisions. On the supply side, senders suppress almost 30 percent of \inconvenient" information, driven by their own preferences for information and their beliefs about the decision maker's preferences. On the demand side, about one-third of decision makers avoids senders who transmit inconvenient information (\shooting the messenger"), which leads to assortative matching between information-suppressing senders and information-avoiding decision makers. Having more control over information generates opposing effects on behavior: sel sh decision makers remain ignorant more often and donate less, while altruistic decision makers seek out informative senders and give more. We discuss applications to information sharing in social networks and to organizational design. |
| Keywords: | Social interactions, Information avoidance, Assortative matching, Ethical behavior, experiment |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03899658&r=cbe |
| By: | Shuguang Jiang; Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - Université de Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We study cheating as a collective-risk social dilemma in a group setting in which individuals are asked to report their actual outcomes. Misreporting their outcomes increases the individual's earnings but when the sum of claims in the group reaches a certain threshold, a risk of collective sanction affects all the group members, regardless of their individual behavior. Because of the pursuit of selfish interest and a lack of coordination with other group members, the vast majority of individuals eventually earn less than the reservation payoff from honest reporting in the group. Over time, most groups are trapped in a "Tragedy of Dishonesty", despite the presence of moral costs of lying. The risk of collective sanction is triggered less frequently in small groups than in large ones, while priming a collectivist mindset has little effect on lying. |
| Keywords: | Dishonesty, Public Bad, Group Size, Collectivism, Individualism, Experiment, Dishonesty Public Bad Group Size Collectivism Individualism Experiment JEL Codes: C92 D01 D91 D62 H41, Experiment JEL Codes: C92, D01, D91, D62, H41 |
| Date: | 2022–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03900919&r=cbe |
| By: | Shuguang Jiang (Centre for Economic Research, Shandong University, Jinan, Shandong, 250100, China); Marie Claire Villeval (Univ Lyon, CNRS, GATE UMR 5824, 93 Chemin des Mouilles, F-69130, Ecully, France. IZA, Bonn, Germany) |
| Abstract: | We study cheating as a collective-risk social dilemma in a group setting in which individuals are asked to report their actual outcomes. Misreporting their outcomes increases the individual’s earnings but when the sum of claims in the group reaches a certain threshold, a risk of collective sanction affects all the group members, regardless of their individual behavior. Because of the pursuit of selfish interest and a lack of coordination with other group members, the vast majority of individuals eventually earn less than the reservation payoff from honest reporting in the group. Over time, most groups are trapped in a “Tragedy of Dishonesty", despite the presence of moral costs of lying. The risk of collective sanction is triggered less frequently in small groups than in large ones, while priming a collectivist mindset has little effect on lying. |
| Keywords: | Dishonesty, Public Bad, Group Size, Collectivism, Individualism, Experiment |
| JEL: | C92 D01 D91 D62 H41 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2216&r=cbe |
| By: | Timothée Demont (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.); Daniela Horta Sáenz (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.); Eva Raiber (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.) |
| Abstract: | Worrisome topics, such as climate change, economic crises, or the Covid-19 pandemic, are increasingly present and pervasive due to digital media and social networks. Do such worries affect cognitive performance? The effect of a distressing topic might be very different depending on whether people have the scope and means to cope with the consequences. It can also differ by how performance is rewarded, for instance, if is there a goal that people can focus on. In an online experiment during the Covid-19 pandemic, we test how the cognitive performance of university students responds to topics discussing (i) current mental health issues related to social restrictions or (ii) future labor market uncertainties linked to the economic contraction. Moreover, we study how the response is affected by a performance goal by conditioning payout on reaching a minimum level. We find that the labor market topic increases cognitive performance when performance is motivated by a goal. Conversely, there is no such effect after the mental health topic. We even find a weak negative effect among those mentally vulnerable when payout is not based on reaching a goal. The positive effect is driven by students with larger financial and social resources, pointing at an inequality-widening mechanism. |
| Keywords: | cognitive performance, financial worries, COVID-19, financial incentives, anxiety, coping behaviors |
| JEL: | C91 D91 D81 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2302&r=cbe |
| By: | Zhuo, Shi; Ratajczak, Michael; Thornton, Katie; Jones, Phil; Jarchlo, Ayla Ibrahimi; Gold, Natalie |
| Abstract: | Food products have significant impacts on the environment over their life cycle. We investigated whether displaying products in ascending order of carbon footprint in an online supermarket environment can shift consumer choices towards more sustainable options. We examined whether the effect of the ordering intervention differs when the ordering is overt (information about the ordering is explicit), compared to when it is covert (participants not told about the ordering). We conducted a three-arm parallel-group randomised trial using 1842 online participants from England, Wales, and Northern Ireland. Participants shopped for a meal, choosing one product from each of six product categories in a simulated online supermarket. Six products were listed vertically on each product-category page. Products were randomly ordered for the control arm but ordered by carbon footprint in the covert and overt ordering arms. In the overt ordering arm, a statement was displayed at the top of each product page about the ordering of products. The primary outcome was whether one of the three most sustainable products was chosen in each product category. There was no effect of the covert ordering on the probability of choosing more sustainable products compared with the control arm (OR = 0.97, 95% CI 0.88-1.07, p = 0.533). Furthermore, we did not find evidence that the effects of the covert ordering and overt ordering differed (p = 0.594). Within the control condition, products in different positions were chosen with similar frequencies, suggesting that product positioning does not have an impact on choices. This may explain why re-ordering products had no effect. In the overt condition, only 19.5% of people correctly answered that the products were ordered according to sustainability in a follow-up question, suggesting that they didn't notice the statement. Results suggest that choices for grocery products might be too ingrained to be changed by subtle rearrangements of choice architecture like the ordering interventions, and highlight the difficulty of conveying information effectively to consumers in the online grocery shopping environment. |
| Keywords: | disclosure; food choice; nudge; online supermarket; order effect; sustainable diet |
| JEL: | L81 |
| Date: | 2023–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117705&r=cbe |
| By: | Franca Glenzer; Pierre-Carl Michaud; Stefan Staubli |
| Abstract: | Many near-retirees forgo a higher stream of public pension income by claiming early. We provide both quasi-experimental and survey-experimental evidence that the timing of public pension claiming is relatively inelastic to changes in financial incentives in Canada. Using the survey experiment, we evaluate the effect of two different educational interventions and different ways of framing the incentive to delay claiming. While all three types of interventions induce delays, these interventions have heterogeneous financial consequences for participants who react. |
| Keywords: | pension claiming; annuities; retirement; financial education; framing |
| JEL: | D91 H55 J14 J26 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:rsi:irersi:11&r=cbe |
| By: | Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun, Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences) |
| Abstract: | While economists in the past tended to assume that individual preferences, including risk preferences, are stable over time, a recent literature has developed and indicates that risk preferences respond to shocks. This paper utilizes a natural experiment with covariate (drought) and idiosyncratic shocks in combination with an independent field risk experiment. The risk experiment uses a Certainty Equivalent - Multiple Choice List (CE-MCL) approach and is played 1-2 years after the subjects were (to a varying degree) exposed to a covariate drought shock or idiosyncratic shocks. The experimental approach facilitated a comprehensive assessment of shock effects on experimental risk premiums with varying probabilities of good and bad outcomes. The experiment also facilitates the estimation of the utility curvature in an Expected Utility (EU) model, and alternatively, separate estimation of probability weighting and utility curvature in three different Rank Dependent Utility (RDU) models with a two-parameter Prelec probability weighting function. Our study is the first to comprehensively test the theoretical predictions of Gollin and Pratt (1996) versus Quiggin (2003). Gollin and Pratt (1996) build on EU theory and state that an increase in background risk will make subjects more risk averse while Quiggin (2003) states that an increase in background risk can enhance risk-taking in certain types of non-EU models. We find strong evidence that such non-EU preferences dominate in our sample and can explain the surprising result. In our sample of resource-poor young adults living in a risky semiarid rural environment in Sub-Saharan Africa, we find that the covariate drought shock had negative effects on risk premiums and the utility curvature and caused an upward shift in the probability weighting function. To our knowledge, this is the first paper to carry out such a rigorous test of a shock effect on utility curvature and probability weighting. |
| Keywords: | Covariate shocks; Idiosyncratic shocks; Stability of risk preference parameters; Field experiment; Ethiopia |
| JEL: | C93 D81 |
| Date: | 2023–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsclt:2023_003&r=cbe |