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on Cognitive and Behavioural Economics |
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Issue of 2023‒06‒26
ten papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Jana Hofmeier (University of Bonn); Louis Strang (University of Cologne) |
| Abstract: | This paper studies the dynamic effect of observability on prosocial behavior. We hypothesize a twofold positive effect. First, people should act more prosocially when being observed. Second, this increased level of prosociality should motivate an ongoing elevated altruistic attitude, in accordance with the concept of altruistic capital formation. We test our predictions running two experiments in which subjects make a first donation decision either observed or anonymously. Subsequently, all subjects face a second anonymous donation decision. In gen- eral, we observe high rates of altruistic behavior. However, we find only weak positive effects of observability on first-stage prosocial behavior and no effects on second-stage prosocial behavior. |
| Keywords: | Prosocial Behavior, Donation, Moral Licensing, Altruistic Capital, Social preferences, Lab experiment |
| JEL: | C91 D64 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:237&r=cbe |
| By: | Simion, Ștefania; Sulka, Tomasz |
| Abstract: | In this paper, we examine which dimensions of cognitive ability are most predictive of key financial outcomes and what pathways could account for the observed relationships. We begin by proposing a conceptual framework that accounts for several plausible "channels" through which differences in cognitive ability might influence financial outcomes. Subsequently, we put the framework to test using the English Longitudinal Study of Ageing. We find that numeracy and literacy are strong predictors of different measures of wealth level and composition, after controlling for a rich set of demographic characteristics. We also find that our end-node channels, planning and self-control, have an even greater predictive power. Nevertheless, despite the fact that these channels are strongly correlated with both numeracy and literacy, they do not fully account for the pathways from cognitive ability to financial outcomes. |
| Keywords: | Cognitive Ability, Numeracy, Financial Literacy, Planning, Self-Control |
| JEL: | C13 D91 J14 J24 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:401&r=cbe |
| By: | Björn Bartling; Alexander W. Cappelen; Henning Hermes; Marit Skivenes; Bertil Tungodden |
| Abstract: | We study paternalistic preferences in two large-scale experiments with participants from the general population in the United States. Spectators decide whether to intervene to prevent a stakeholder, who is mistaken about the choice set, from making a choice that is not aligned with the stakeholders’ own preferences. We find causal evidence for the nature of the intervention being of great importance for the spectators’ willingness to intervene. Only a minority of the spectators implement a hard intervention that removes the stakeholder’s freedom to choose, while a large majority implement a soft intervention that provides information without restricting the choice set. This finding holds regardless of the stakeholder’s responsibility for being mistaken about the choice set – whether the source of mistake is internal or external – and in different subgroups of the population. We introduce a theoretical framework with two paternalistic types – libertarian paternalists and welfarists – and show that the two types can account for most of the spectator behavior. We estimate that about half of the spectators are welfarists and that about a third are libertarian paternalists. Our results shed light on attitudes toward paternalistic policies and the broad support for soft interventions. |
| Keywords: | paternalism, libertarian paternalism, welfarism, freedom to choose |
| JEL: | C91 C93 D69 D91 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10441&r=cbe |
| By: | Bartling, Björn (University of Zurich); Cappelen, Alexander W. (NHH Bergen, Norway); Hermes, Henning (Düsseldorf Institute for Competition Economics (DICE)); Skivenes, Marit (University of Bergen); Tungodden, Bertil (NHH Bergen, Norway) |
| Abstract: | We study paternalistic preferences in two large-scale experiments with participants from the general population in the United States. Spectators decide whether to intervene to prevent a stakeholder, who is mistaken about the choice set, from making a choice that is not aligned with the stakeholders' own preferences. We find causal evidence for the nature of the intervention being of great importance for the spectators' willingness to intervene. Only a minority of the spectators implement a hard intervention that removes the stakeholder's freedom to choose, while a large majority implement a soft intervention that provides information without restricting the choice set. This finding holds regardless of the stakeholder's responsibility for being mistaken about the choice set – whether the source of mistake is internal or external – and in different subgroups of the population. We introduce a theoretical framework with two paternalistic types – libertarian paternalists and welfarists – and show that the two types can account for most of the spectator behavior. We estimate that about half of the spectators are welfarists and that about a third are libertarian paternalists. Our results shed light on attitudes toward paternalistic policies and the broad support for soft interventions. |
| Keywords: | paternalism, libertarian paternalism, welfarism, freedom to choose |
| JEL: | C91 C93 D69 D91 |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16151&r=cbe |
| By: | D'Acunto, Francesco; Hoang, Daniel; Paloviita, Maritta; Weber, Michael |
| Abstract: | Unique administrative data on a representative population's cognitive abilities, spending, and financials reveal that consumers at or below median cognitive abilities barely react when their incentives to spend or borrow change, even if they earn high incomes and are financially unconstrained and conditional on formal education, personal and macroeconomic expectations, and rich demographics. Matched survey-based data on this population show that non-responsive consumers fail to grasp how the incentives to consume, save, and borrow change over time. Cognitive constraints limit the effectiveness of policies targeting household consumption and debt and might lead to regressive redistribution from low- to high-cognitive-ability consumers. |
| Keywords: | Behavioral Economics, Limited Cognition, Consumption, Borrowing, Heterogeneous Agents, Redistribution, Inequality |
| JEL: | D12 D91 E21 E52 G41 G51 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofrdp:92023&r=cbe |
| By: | Bartling, Björn; Cappelen, Alexander W.; Hermes, Henning; Skivenes, Marit; Tungodden, Bertil |
| Abstract: | We study paternalistic preferences in two large-scale experiments with participants from the general population in the United States. Spectators decide whether to intervene to prevent a stakeholder, who is mistaken about the choice set, from making a choice that is not aligned with the stakeholders' own preferences. We find causal evidence for the nature of the intervention being of great importance for the spectators' willingness to intervene. Only a minority of the spectators implement a hard intervention that removes the stakeholder's freedom to choose, while a large majority implement a soft intervention that provides information without restricting the choice set. This finding holds regardless of the stakeholder's responsibility for being mistaken about the choice set - whether the source of mistake is internal or external - and in different subgroups of the population. We introduce a theoretical framework with two paternalistic types - libertarian paternalists and welfarists - and show that the two types can account for most of the spectator behavior. We estimate that about half of the spectators are welfarists and that about a third are libertarian paternalists. Our results shed light on attitudes toward paternalistic policies and the broad support for soft interventions. |
| Keywords: | paternalism, libertarian paternalism, welfarism, freedom to choose |
| JEL: | C91 C93 D69 D91 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:400&r=cbe |
| By: | Carpenter, Jeffrey P. (Middlebury College); Lyford, Alex (Middlebury College); Zhang, Mingfang (Middlebury College) |
| Abstract: | Measuring the social preferences of economic agents using experiments has become common place. This process, while incentive compatible, is costly and time consuming, making it infeasible in many settings. We combine standard altruism and warm glow choice experiments with a battery of candidate survey questions to construct behaviorally-validated questionnaires. We use machine learning to create parsimonious 3-question modules that reliably replicate existing results on general altruism and provide an alternative method for collecting warm glow preferences. |
| Keywords: | experiment, altruism, warm glow, survey validation |
| JEL: | C91 D64 D91 H41 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16205&r=cbe |
| By: | Matteo Benuzzi; Matteo Ploner |
| Abstract: | Recent theoretical and empirical contributions have demonstrated the sig- nificance of higher-order moments, such as skewness, in influencing financial decisions. Most current experimental literature relies on lotteries with a lim- ited number of potential outcomes, which do not accurately represent real-life investments. To address this gap, we conducted a pre-registered experiment that examines preferences toward investment opportunities with varying skew- ness using continuous distributions. Our findings reveal several key insights. Firstly, there is an overall preference for positively skewed distributions of outcomes. Secondly, we observed a substitution effect between risk-taking, as measured by variance, and the direction of skewness. Lastly, we established a positive correlation between skewness-seeking behavior and speculative be- havior and a negative correlation between skewness-seeking behavior and risk perception of positive skewness. |
| Keywords: | Skewness, Risk-taking, Stochastic Dominance, Experiment |
| JEL: | C91 D81 G11 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:2301&r=cbe |
| By: | Lavinia Kinne |
| Abstract: | How to give feedback in learning environments is a widely discussed topic. I design a field experiment to understand whether the ordering of feedback elements matters for motivation and performance. In random order, university students get one positive and one negative feedback element on their performance in exam practice questions. Students who first receive positive feedback are more motivated to study for the exam compared to those receiving negative feedback first. This effect is driven by a drop in motivation after negative feedback when receiving it first, but not when receiving it second. Furthermore, students adjust their study content to the feedback topics. I find no significant effects of feedback ordering on exam performance overall, but students who first receive the positive feedback perform better if their negative-feedback topic is covered in the exam. |
| Keywords: | Education, feedback, motivation, performance |
| JEL: | D83 I20 I23 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_396&r=cbe |
| By: | Fehr, Ernst (University of Zurich); Charness, Gary (University of California, Santa Barbara) |
| Abstract: | We review the vast literature on social preferences by assessing what is known about their fundamental properties, their distribution in the broader population, and their consequences for important economic and political behaviors. We provide, in particular, an overview of the empirically identified characteristics of distributional preferences and how they are affected by merit, luck, and risk considerations as well as by concerns for equality of opportunity. In addition, we identify what is known about belief-dependent social preferences such as reciprocity and guilt aversion. The evidence indicates that the big majority of individuals have some sort of social preference while purely self- interested subjects are a minority. Our review also shows how the findings from laboratory experiments involving social preferences provide a deeper understanding of important field phenomena such as the consequences of wage inequality on work morale, employees' resistance to wage cuts, individuals' self-selection into occupations and sectors that are more or less prone to morally problematic behaviors, as well as issues of distributive politics. However, although a lot has been learned in recent decades about social preferences, there are still many important, unresolved, yet exciting, questions waiting to be tackled. |
| Keywords: | social preferences, altruism, inequality aversion, image concerns, reciprocity |
| JEL: | D0 D2 D9 H0 J0 P0 |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16200&r=cbe |