|
on Cognitive and Behavioural Economics |
|
Issue of 2023‒05‒08
two papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Benjamin Enke; Thomas Graeber; Ryan Oprea |
| Abstract: | We provide experimental evidence that core intertemporal choice anomalies – including extreme short-run impatience, structural estimates of present bias, hyperbolicity and transitivity violations – are driven by complexity rather than time or risk preferences. First, all anomalies also arise in structurally similar atemporal decision problems involving valuation of iteratively discounted (but immediately paid) rewards. These computational errors are strongly predictive of intertemporal decisions. Second, intertemporal choice anomalies are highly correlated with indices of complexity responses including cognitive uncertainty and choice inconsistency. We show that model misspecification resulting from ignoring behavioral responses to complexity severely inflates structural estimates of present bias. |
| Keywords: | complexity, hyperbolic discounting, present bias, bounded rationality, noise, cognitive uncertainty |
| JEL: | C91 D91 G00 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10327&r=cbe |
| By: | Palaash Bhargava; Daniel L. Chen; Matthias Sutter; Camille Terrier |
| Abstract: | Social networks are a key factor of success in life, but they are also strongly segmented on gender, ethnicity, and other demographic characteristics (Jackson, 2010). We present novel evidence on an understudied source of homophily: behavioral traits. Behavioral traits are important determinants of life outcomes. While recent work has focused on how these traits are influenced by the family environment, or how they can be affected by childhood interventions, little is known about how these traits are related to social networks. Based on unique data collected using incentivized experiments on more than 2, 500 French high-school students, we find high levels of homophily across all ten behavioral traits that we study. Notably, the extent of homophily depends on similarities in demographic characteristics, in particular with respect to gender. Furthermore, the larger the number of behavioral traits that students share, the higher the overall homophily. Using network econometrics, we show that the observed homophily is not only an outcome of endogenous network formation, but is also a result of friends influencing each others’ behavioral traits. Importantly, the transmission of traits is larger when students share demographic characteristics, such as gender, have longer periods of friendship, or are friends with more popular individuals. |
| Keywords: | homophily, social networks, behavioural traits, peer effects, experiments |
| JEL: | D85 C91 D01 D90 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10351&r=cbe |