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on Cognitive and Behavioural Economics |
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Issue of 2023‒11‒20
five papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Christos Genakos; Costas Roumanias; Tommaso Valletti |
| 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 |
| Date: | 2023–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1939&r=cbe |
| By: | Giovanni Montanari; Salvatore Nunnari |
| Abstract: | We report the results of an experiment on selective exposure to information. A decision maker interested in learning about an uncertain state of the world can acquire information from one of two sources which have opposite biases: when informed on the state, they report it truthfully; when uninformed, they report their favorite state. A Bayesian decision maker is better off seeking confirmatory information unless the source biased against the prior is sufficiently more reliable. In line with the theory, subjects are more likely to seek confirmatory information when sources are symmetrically reliable. On the other hand, when sources are asymmetrically reliable, subjects are more likely to consult the more reliable source even when prior beliefs are strongly unbalanced and this source is less informative. Our experiment suggests that base rate neglect and simple heuristics (e.g., listen to the most reliable source) are important drivers of the endogenous acquisition of information. |
| Keywords: | information acquisition, biased information sources, selective exposure, echo chambers, confirmation bias, base rate neglect, laboratory experiment |
| JEL: | C91 D81 D83 D91 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10699&r=cbe |
| By: | Ernst Fehr (Department of Economics, Zurich University. Blümlisalpstrasse 10, 8006 Zurich, Switzerland); Thomas Epper (IESEG School of Management, Univ. Lille, CNRS, UMR 9221- LEM - Lille Economie Management F-59000 Lille, France); Julien Senn (Department of Economics, Zurich University. Blûmlisalpstrasse 10, 8006 Zurich, Switzerland) |
| Abstract: | Increasing inequality and associated egalitarian sentiments have put redistribution on the political agenda. In this paper, we take advantage of Swiss direct democracy, where people voted several times on strongly redistributive policies in national plebiscites, to study the link between social preferences and a behaviorally validated measure of support for redistribution in a broad sample of the Swiss population. Using a novel nonparametric Bayesian clustering algorithm, we uncover the existence of three fundamentally distinct preference types in the population: predominantly selfish, inequality averse and altruistic individuals. We show that inequality averse and altruistic individuals display a much stronger support for redistribution, particularly if they are more affluent. In addition, we show that previously identified key motives underlying opposition to redistribution – such as the belief that effort is an important driver of individual success – play no role for selfish individuals but are highly relevant for other-regarding individuals. Finally, while inequality averse individuals display strong support for policies that primarily aim to reduce the incomes of the rich, altruistic individuals are considerably less supportive of these policies. Thus, knowledge about the qualitative properties of social preferences and their distribution in the population also provides insights into which preference type supports specific redistributive policies, which has implications for how policy makers may design redistributive packages to maximize political support for them. |
| Keywords: | Social Preferences, Altruism, Inequality Aversion, Preference Heterogeneity, Demand for Redistribution |
| JEL: | D31 D72 H23 H24 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:e202308&r=cbe |
| By: | George Loewenstein; Zachary Wojtowicz |
| Abstract: | Attention is a pivotal resource in the modern economy and plays an increasingly prominent role in economic analysis. We summarize research on attention from both psychology and economics, placing a particular emphasis on its capacity to explain numerous documented violations of classical economic theory. We also propose promising new directions for future research, including attention-based utility, the recent proliferation of attentional externalities introduced by digital technology, the potential for artificial intelligence to compete with human attention, and the significant role that boredom, curiosity, and other motivational states play in determining how people allocate attention. |
| Keywords: | attention, motivation, behavioural bias, information, learning, education, artificial intelligence, machine learning, future of work |
| JEL: | D83 D90 D91 I00 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10712&r=cbe |
| By: | Lara Berger (University of Cologne); Anna Kerkhof (University of Munich, ifo Institute for Economic Research, and CESifo); Felix Mindl (University of Cologne and iwp Institute for Economic Policy); Johannes Münster (University of Cologne) |
| Abstract: | We conduct a randomized survey experiment to compare the short-term and longer-term effects of fact checking to a brief media literacy intervention. We show that the impact of fact checking is limited to the corrected fake news, whereas media literacy helps to distinguish between false and correct information more generally, both immediately and two weeks after the intervention. A plausible mechanism is that media literacy enables participants to critically evaluate social media postings, while fact checking fails to enhance their skills. Our results promote media literacy as an effective tool to fight fake news, that is cheap, scalable, and easy-to-implement. |
| Keywords: | Covid, Facebook, fact checking, fake news, media literacy, misinformation, nutrition, social media, supplements, survey experiment, vaccine |
| JEL: | L51 L82 Z18 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:262&r=cbe |