nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2023‒07‒31
six papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Coevolution of cognition and cooperation in structured populations under reinforcement learning By Ennio Bilancini; Leonardo Boncinelli; Rossana Mastrandrea
  2. Prospect theory’s loss aversion is robust to stake size By Han Bleichrodt; Olivier L’haridon
  3. Is Having an Expert “Friend†Enough? An Analysis of Consumer Switching Behavior in Mobile Telephony By Genakos, C.; Roumanias, C.; Valletti, T.
  4. Heterogeneity in health insurance choice: An experimental investigation of consumer choice and feature preferences By Hermanns, Benedicta; Kairies-Schwarz, Nadja; Kokot, Johanna; Vomhof, Markus
  5. Social networks and organizational helping behavior: Experimental evidence from the helping game By Erkut, Hande; Reuben, Ernesto
  6. Confessions of a pirate: Gender difference in survey prime to increase honest reporting By Kate Whitman; Zahra Murad; Joe Cox

  1. By: Ennio Bilancini; Leonardo Boncinelli; Rossana Mastrandrea
    Abstract: We study the evolution of behavior under reinforcement learning in a Prisoner's Dilemma where agents interact in a regular network and can learn about whether they play one-shot or repeatedly by incurring a cost of deliberation. With respect to other behavioral rules used in the literature, (i) we confirm the existence of a threshold value of the probability of repeated interaction, switching the emergent behavior from intuitive defector to dual-process cooperator; (ii) we find a different role of the node degree, with smaller degrees reducing the evolutionary success of dual-process cooperators; (iii) we observe a higher frequency of deliberation.
    Date: 2023–06
  2. By: Han Bleichrodt (UA - Université d'Alicante, Espagne); Olivier L’haridon (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Several papers have challenged the robustness of loss aversion, claiming that it is context-dependent and disappears for small stakes. These papers use a behavioral definition of loss aversion that may be confounded by diminishing sensitivity and probability/event weighting under the new version of prospect theory (PT). We perform a new theory-based test of loss aversion that controls for these confounds. We found significant loss aversion for both small stakes and high stakes. The overall loss aversion coefficient varied between 1.25 and 1.45, less than commonly observed. Loss aversion decreased slightly for small stakes, but the effect was small and usually insignificant. Overall, our results indicate that, under PT, loss aversion is robust to stake size. © 2023, Society for Judgment and Decision making. All rights reserved.
    Keywords: context dependence, loss aversion, measurement
    Date: 2023
  3. By: Genakos, C.; Roumanias, C.; Valletti, T.
    Abstract: We present novel evidence from a large panel of UK consumers who receive personalized reminders from a specialist price-comparison website about the precise amount they could save by switching to their best-suited alternative mobile telephony plan. We document three phenomena. First, even self-registered consumers with positive savings exhibit inertia. Second, we show that being informed about potential savings has a positive and significant effect on switching. Third, controlling for savings, the effect of incurring overage payments is significant and similar in magnitude to the effect of savings: paying an amount that exceeds the recurrent monthly fee weighs more on the switching decision than being informed that one can save that same amount by switching to a less inclusive plan. We interpret this asymmetric reaction on switching behavior as potential evidence of loss aversion. In other words, when facing complex and recurrent tariff plan choices, consumers care about savings but also seem to be willing to pay upfront fees in order to get “peace of mind†.
    Keywords: tariff/plan choice, inertia, switching, loss aversion, mobile telephony
    JEL: D91 D12 D81 L96 M30
    Date: 2023–07–11
  4. By: Hermanns, Benedicta; Kairies-Schwarz, Nadja; Kokot, Johanna; Vomhof, Markus
    Abstract: We investigate heterogeneity in patterns of preferences for health insurance features using health insurance choice data from a controlled laboratory experiment. Within the experiment, participants make consecutive insurance choices based on choice sets that vary in composition and size. We keep the health risk constant and equal for everyone. In addition, we implement a treatment that entails a feature-based insurance filter, allowing us to validate feature preferences. We also account for individually elicited risk preferences. On aggregate, we find that there is considerable heterogeneity in consumer choice. Participants differ particularly (a) in their willingness to pay to insure themselves against illnesses that differ in terms of their probability of occurrence and the size of the losses to be covered and (b) in their preference to forgo deductibles. However, if we measure the quality of individuals' decisions based on risk preferences, the heterogeneity among participants disappears. Our results suggest that heterogeneity in health insurance choices is not reflected in decision quality when we assume a rank-dependent expected utility model of risk preferences.
    Keywords: health insurance, consumer preferences, heterogeneity, laboratory experiment, risk preferences
    JEL: C91 I13 D81 D83 G22
    Date: 2023
  5. By: Erkut, Hande; Reuben, Ernesto
    Abstract: This paper studies the causal impact of social ties and network structure on helping behavior in organizations. We introduce and experimentally study a game called the 'helping game, ' where individuals unilaterally decide whether to incur a cost to help other team members when helping is a rivalrous good. We find that social ties have a strong positive effect on helping behavior. Individuals are more likely to help those with whom they are connected, but the likelihood of helping decreases as the social distance between individuals increases. Additionally, individuals who are randomly assigned to be more central in the network are more likely to help others.
    Keywords: helping, social ties, social networks, communication, organizations
    JEL: D23 D91
    Date: 2023
  6. By: Kate Whitman (University of Portsmouth); Zahra Murad (University of Portsmouth); Joe Cox (University of Portsmouth)
    Abstract: Survey data is essential for marketing and scientific research. However, recent evidence suggests that men and women may underreport undesirable behavior to different degrees and for different motivations, making it difficult for marketers to trust consumer data. Two survey experiments were conducted to test priming effects aimed at minimizing social desirability bias, hypothesizing a gender difference in efficacy. Using digital piracy as an example of an underreported behavior, Study 1 shows that a positive cues condition, which is designed to provide respondents with convenient rationalizations, increases undesirable behavior reporting. Negative primes have a greater inhibitory effect on men’s reporting of undesirable behavior compared to women’s, thus reversing the gender reporting gap. Study 2 explores the relationship between measured social desirability bias, positive cues, and gender. We find that the treatment has the strongest effect on men and only significantly affects participants with high social desirability bias. When considering both studies (N = 1, 734) we estimate that the positive cues treatment increases the amount of piracy participants are willing to report by 42%. Market researchers are recommended to add positive cues before questions about undesirable behavior, especially in the case of men. Furthermore, sequential undesirable behavior questions are likely to increasingly inhibit men’s reporting, suggesting that market researchers should randomize these sensitive questions.
    Keywords: Social Desirability Bias; Digital Piracy; Survey Primes; Cognitive Dissonance; Moral Decision Making; Response Bias; Survey Methodology
    JEL: C83
    Date: 2023–07–12

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