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on Cognitive and Behavioural Economics |
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Issue of 2023‒03‒20
seven papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Goldfayn-Frank, Olga; Vellekoop, Nathanael |
| Abstract: | We explore how personality traits are related to household borrowing behavior. Using survey data representative for the Netherlands, we consider the Big Five personality traits (openness, conscientiousness, agreeableness, extraversion and neuroticism), as well as the belief that one is master of one's fate (locus of control). We hypothesize that personality traits can complement as well as substitute financial knowledge of a household. We present three sets of results. First, we find that personality traits are positively correlated with borrowing expectations. Locus of control, extraversion and agreeableness are correlated with informal borrowing expectations, which is the expectation that one can borrow from family and friends. With respect to expectations on the approval of a formal loan application, it is locus of control and conscientiousness that are positively associated. Effect sizes are large and economically meaningful. Second, we find that personality traits are important for borrowing constraints. A more internal locus of control and higher neuroticism are correlated with being denied for credit, as well as discouraged borrowing. Our third set of results reports findings on personality traits and loan regret, and how traits are correlated with dealing with loan troubles. Many households in our sample express regret (21%), but more open, more agreeable and more neurotic individuals are more likely to express regret. Our results are not driven by financial knowledge, time preferences or risk attitudes. Overall these findings imply that non-cognitive traits are important for borrowing behavior of households. |
| Keywords: | borrowing constraints, personality traits, household finance |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:381&r=cbe |
| By: | Davide Carpentiere; Angelo Petralia |
| Abstract: | Many bounded rationality approaches discussed in the literature are models of limited consideration. We provide a novel representation and data interpretation for some of the analyzed behavioral patterns. Moreover, we characterize a testable choice procedure that allows the experimenter to uniquely infer limited consideration from irrational features of the observed behavior. |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2302.00978&r=cbe |
| By: | Chapkovski, Philipp; Zakharov, Alexei |
| Abstract: | Does the animosity toward a holder of an opposite political opinion or the behavior toward someone whose opinion on a divisive issue is unknown depends on whether that opinion was disclosed or withheld voluntarily? In order to study this question, we conducted a pre-registered study in Russia, measuring the pro-war dictators' behavior towards their partners with aligned or conflicting views on the war in Ukraine using give-or-take modification of Dictator Game. In the presence of a large polarisation gap (outgroup discrimination), we did not find that intentional vs. unintentional disclosure of the recipients' positions affected the transfers of the dictators; at the same time, dictators' beliefs about the share of war supporters among experiment participants and the donations made by other dictators were causally affected. Our study is the first one to consider this dimension of social interactions, and contributes to the quickly growing literature on political polarisation. |
| Keywords: | disclosure; transparency; polarization; dictator game; war in Ukraine; Russia |
| JEL: | C91 C92 D64 D74 D82 D83 |
| Date: | 2023–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116305&r=cbe |
| By: | Sylvain Chabé-Ferret (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Institute for Advanced Studies - Institute for Advanced Studies); Philippe Le Coënt (BRGM - Bureau de Recherches Géologiques et Minières (BRGM)); Caroline Lefebvre (Laboratoire de Virologie [Toulouse] - CHU Toulouse [Toulouse]); Raphaële Préget (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro - Montpellier SupAgro - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); François Salanié (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Subervie Julie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Sophie S. Thoyer (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier) |
| Abstract: | Nudges are increasingly used to alter the behavior of economic agents as an alternative to monetary incentives. However, little is known as to whether nudges can backfire, that is, how and when they may generate effects opposite to those they intend to achieve. We provide the first field evidence of a nudge that is designed to encourage pro-environmental behavior, which instead backfires. We randomly allocate a social comparison nudge inviting winegrowers to adopt biological pest control as an alternative to chemical pesticide use. We find that our nudge decreases by half the adoption of biological pest control among the largest vineyards, where the bulk of adoption occurs. We show that this result can be rationalized in an economic model where winegrowers and winegrower-cooperative managers bargain over future rents generated by the adoption of biological pest control. This study highlights the importance of experimenting on a small scale with nudges aimed at encouraging adoption of virtuous behaviors in order to detect unexpected adverse effects, particularly in contexts where negotiations on the sharing of the costs of adoption are likely to occur. |
| Keywords: | Nudges, Behavioral Economics, Pesticides, Government Policy. |
| Date: | 2023–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03971193&r=cbe |
| By: | Zhang, Xin (Beijing Normal University); Chen, Xi (Yale University); Zhang, Xiaobo (Peking University) |
| Abstract: | This paper offers one of the first evidence in a developing country context that transitory exposure to high temperatures may disrupt low-stakes cognitive activities across a range of age cohorts. By matching eight years of repeated cognitive tests among all the participants in a nationally representative longitudinal survey in China with weather data according to the exact time and geographic location of their assessment, we show that exposure to a temperature above 32 °C on the test date, relative to a moderate day within 22–24 °C, leads to a sizable decline in their math scores by 0.066 standard deviations (equivalent to 0.23 years of education). Also, the effect on the math test scores becomes more pronounced as people age, especially for males and the less educated. However, the test takers living in hotter regions or those with air conditioning installed on site are less vulnerable to extreme high temperatures, indicating the role of adaptation. |
| Keywords: | cognition, high temperatures, climate change, adaptation, age gradients |
| JEL: | I24 Q54 Q51 D91 J14 J16 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15972&r=cbe |
| By: | Naudé, Wim (RWTH Aachen University) |
| Abstract: | The possibility that artificial extraterrestrial intelligence poses an existential threat to humanity is neglected. It is also the case in economics, where both AI existential risks and the potential long-term consequences of an AGI are neglected. This paper presents a thought experiment to address these lacunas. It is argued that it is likely that any advanced extraterrestrial civilization that we may encounter will be an AGI, and such an AGI will pose an existential risk. Two arguments are advanced for why this is the case. One draws on the Dark Forest Hypothesis and another on the Galactic Colonization Imperative. Three implications for how we govern AI and insure against potential existential risks follow. These are (i) accelerating the development of AI as a precautionary step; (ii) maintaining economic growth until we attain the wealth and technological levels to create AGI and expand into the galaxy; and (iii) putting more research and practical effort into solving the Fermi Paradox. Several areas where economists can contribute to these three implications are identified. |
| Keywords: | technology, artificial intelligence, existential risk, Fermi paradox, Grabby Aliens |
| JEL: | O40 O33 D01 D64 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15924&r=cbe |
| By: | Casoria, Fortuna (GATE, University of Lyon); Galeotti, Fabio (CNRS, GATE); Villeval, Marie Claire (CNRS, GATE) |
| Abstract: | We combined a natural experiment (the occurrence of the COVID-19 pandemic in 2020) with the tools of laboratory experiments to study whether and how an unprecedented shock on social interactions (the introduction and abrogation of a nationwide lockdown) affected the evolution of individuals' social preferences, and willingness to trust others. In a longitudinal online incentivized experiment during the first lockdown in France, we elicited the same participants' preferences for prosociality, trust and trustworthiness every week for three months. Despite the exposure to long-lasting social distancing, prosocial preferences and the willingness to reciprocate the trust of others remained stable during the whole period under study. In contrast, the lockdown had an immediate negative effect on trust, which remained at lower levels til after the lifting of such measures but recovered its initial level nine months later. The decline in trust was mainly driven by individuals who experienced financial hardship, a lack of outward exposure, and higher anxiety during the lockdown. |
| Keywords: | social preferences, trust, trustworthiness, pandemic, COVID-19, social distancing |
| JEL: | C92 K1 I18 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15929&r=cbe |