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on Cognitive and Behavioural Economics |
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Issue of 2024‒06‒17
five papers chosen by |
| By: | Alger, Ingela; Rivero-Wildemauwe, José Ignacio |
| Abstract: | We conduct a laboratory experiment using framing to assess the willing-ness to “sell a lemon”, i.e., to undertake an action that benefits self but hurts the other (the “buyer”). We seek to disentangle the role of other-regarding preferences and (Kan-tian) moral concerns, and to test if it matters whether the decision is described in neutral terms or as a market situation. When evaluating an action, morally motivated individuals consider what their own payo would be if—hypothetically—the roles were reversed and the other subject chose the same action (universalization). We vary the salience of role uncertainty, thus varying the ease for participants to envisage the role-reversal scenario. We find that subjects are (1) more likely to “sell a lemon” in the market frame, and (2) less likely to do so when the role uncertainty is salient. We also structurally estimate other-regarding and Kantian moral concern parameters. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:129329&r= |
| By: | Drichoutis, Andreas C.; Palma, Marco; Feldman, Paul |
| Abstract: | Previous literature analyzing the effects of incentive compatibility of experimental payment mechanisms is dominated by theory. With overwhelming evidence of theory violations in a multiplicity of domains, we fill this gap by empirically exploring the effects of different payment mechanisms in induced preference elicitation using a large sample of over 3800 participants across three experiments. In Experiment 1, we collected responses for offer prices to sell a card like in Cason and Plott (2014), systematically varying on a between-subjects basis the way subjects received payments over repeated rounds, by either paying for all decisions (and various modifications) or just one, as well as making the payments certain, probabilistic or purely hypothetical. While we find that the magnitude of the induced value and the range of the prices used to draw a random price significantly affect misbidding behavior, neither the payment mechanism nor the certainty of payment affected misbidding. In Experiment 2, we replaced the BDM mechanism with a second price auction and found similar results, albeit less misbidding rates. In Experiment 3, we examine the effect of payment mechanisms on choice under risk and find portfolio effects (i.e., paying all rounds) when the lottery pairs do not involve options with certainty. Overall, our empirical exercise shows that payment mechanism design considerations should place more weight on the choice architecture rather than on incentive compatibility. |
| Keywords: | Becker-DeGroot-Marschak mechanism, second price auction, risk choices, preference elicitation, choice architecture |
| JEL: | C80 C91 D44 |
| Date: | 2024–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120898&r= |
| By: | Gergely Hajdu (Department of Economics, Vienna University of Economics and Business); Nikola Frollová (Department of Management, Prague University of Economics and Business) |
| Abstract: | Choosing between payment based on one’s own performance or others’ is inherent in most delegation decisions. We propose and test that such self-reliance dilemma could result in motivated reasoning about own and others’ performances. Participants in an experiment face this dilemma and learn about it either before or after reporting their beliefs. We find that learning about the dilemma decreases participants’ beliefs about their counterpart’s performance advantage (CPA) by an average of 17%. Furthermore, it causes an average overestimation of one’s own performance and increases the fraction of participants who falsely believe they outperformed their counterpart. Organizations should, therefore, carefully manage delegation decisions and implement measures to curb overconfidence. |
| Keywords: | overconfidence, self-reliance, motivated reasoning |
| JEL: | D90 C91 D83 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp363&r= |
| By: | Goerg, Sebastian J. (TUMCS for Biotechnology and Sustainability, Technical University Munich, Straubing, Germany); Himmler, Oliver (University of Erfurt, Germany); König, Tobias (Department of Economics and Statistics) |
| Abstract: | This paper explores the contagion effects of norm-violating behavior across decision situations. Through a series of laboratory and field experiments, we empirically establish the conditions under which norm-breaking behavior in one decision situation leads individuals who observe this to violate norms in other, distinct decision situations. Our laboratory findings show that these spillover effects are more pronounced when the norms underlying the decision situations are perceived to be similar. However, spillovers can also affect decision situations governed by relatively dissimilar norms if the observers of norm violations have had the opportunity to first violate the same norm as the observed violator themselves. In an accompanying field experiment, we underscore the economic importance of norm similarity for spillover effects. When workers are exposed to information about celebrities evading taxes, they exhibit significantly higher rates of workplace theft than those in the control group, yet this exposure does not negatively affect work morale. |
| Keywords: | Norms; Cheating; Peer Effects; Tax Evasion; Workplace Theft; Work Effort; Conditional Compliance; Unethical Behavior |
| JEL: | A12 C93 D01 D03 |
| Date: | 2024–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vxesta:2024_008&r= |
| By: | Mira Fischer (WZB Berlin); Philipp Lergetporer (TU Munich); Katharina Werner (ifo Institute) |
| Abstract: | Behavioral policy, such as leveraging defaults, is increasingly employed by governments worldwide, but has sometimes faced public backlash, which limits political feasibility. We conducted a survey experiment with a large, representative sample to explore how the narrative describing the psychological mechanism by which a default rule impacts a socially significant outcome affects public approval. Respondents are presented with a vignette in which an unemployed person follows a default to participate in further training. We experimentally vary the narrative about his reasons for doing so. Compared to the baseline condition in which no information on the psychological mechanism is provided, voluntary ignorance, involuntary ignorance, perceived social expectations and perceived social pressure each reduce policy approval. These factors also lead to more negative perceptions of the default rule's impact on the decision maker’s welfare and autonomy. The benign mechanism of deliberate endorsement, however, does not significantly raise approval or perceptions. We show that these findings hold irrespective of assumed preferences and discuss their practical implications. |
| Keywords: | behavioral policy; public support; psychological mechanisms; default rule; |
| JEL: | D91 D83 I31 J68 |
| Date: | 2024–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:505&r= |