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on Cognitive and Behavioural Economics |
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Issue of 2024‒06‒24
six papers chosen by |
| By: | Snir, Avichai; Levy, Dudi; Wang, Dian; Chen, Haipeng (Allan); Levy, Daniel |
| Abstract: | Many experimental studies report that economics students tend to act more selfishly than students of other disciplines, a finding that received widespread public and professional attention. Two main explanations that the existing literature offers for the differences found in the behavior between economists and non-economists are: (i) the selection effect, and (ii) the indoctrination effect. We offer an alternative, novel explanation: we argue that these differences can be explained by differences in the interpretation of the context. We test this hypothesis by conducting two social dilemma experiments in the US and Israel with participants from both economics and non-economics majors. In the experiments, participants face a tradeoff between profit maximization (market norm) and workers’ welfare (social norm). We use priming to manipulate the cues that the participants receive before they make their decision. We find that when participants receive cues signaling that the decision has an economic context, both economics and non-economics students tend to maximize profits. When the participants receive cues emphasizing social norms, on the other hand, both economics and non-economics students are less likely to maximize profits. We conclude that some of the differences found between the decisions of economics and non-economics students can be explained by contextual cues. |
| Keywords: | Selection; Indoctrination; Self-Interest; Market Norms; Social Norms; Economic Man; Rational Choice; Fairness; Experimental Economics; Laboratory Experiments; Priming; Economists vs. Non-Economists; Behavioral Economics |
| JEL: | A11 A12 A13 A20 B40 C90 C91 D01 D63 D91 P10 |
| Date: | 2024–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120871&r= |
| By: | Daniele Nosenzo (Aarhus Univeristy, Denmark); Erte Xiao (Monash University, Australia); Nina Xue (Monash University, Australia) |
| Abstract: | The literature on punishment and prosocial behavior has presented conflicting findings. In some settings, punishment crowds out prosocial behavior and backfires; in others, however, it promotes prosociality. We examine whether the punisher’s motives can help reconcile these results through a novel experiment in which the agent’s outcomes are identical in two environments, but in one the pre-emptive punishment scheme is self-serving (i.e., potentially benefits the punisher), while in the other it is other-regarding (i.e., potentially benefits a third party). We find that self-serving punishment reduces the social stigma of selfish behavior, while other-regarding punishment does not. Self-serving punishment is thus less effective at encouraging compliance and is more likely to backfire. We further show that the normative message is somewhat weaker when punishment is less costly for the punisher. Our findings have implications for the design of punishment mechanisms and highlight the importance of the punisher’s motives in expressing norms. |
| Keywords: | punishment, norms, stigma, crowd out, expressive function of punishment |
| JEL: | C91 C72 D02 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:2024-09&r= |
| By: | Kai Barron; Tilman Fries |
| Abstract: | We study how one person may shape the way another person interprets objective information. They do this by proposing a sense-making explanation (or narrative). Using a theory-driven experiment, we investigate the mechanics of such narrative persuasion. Our results reveal several insights. First, narratives are persuasive: We find that they systematically shift beliefs. Second, narrative fit (coherence with the facts) is a key determinant of persuasiveness. Third, this fit-heuristic is anticipated by narrative-senders, who systematically tailor their narratives to the facts. Fourth, the features of a competing narrative predictably influence both narrative construction and adoption. |
| Keywords: | Narratives, beliefs, explanations, mental models, experiment, financial advice |
| JEL: | D83 G40 G50 C90 |
| Date: | 2024–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:bdp:dpaper:0039&r= |
| By: | Sandro Ambuehl; Heidi C. Thysen |
| Abstract: | Good decision-making requires understanding the causal impact of our actions. Often, we only have access to correlational data that could stem from multiple causal mechanisms with divergent implications for choice. Our experiments comprehensively characterize choice when subjects face conflicting causal interpretations of such data. Behavior primarily reflects three types: following interpretations that make attractive promises, choosing cautiously, and assessing the fit of interpretations to the data. We characterize properties of interpretations that obscure bad fit to subjects. Preferences for more complex models are more common than those reflecting Occam’s razor. Implications extend to the Causal Narratives and Model Persuasion literatures. |
| JEL: | C91 D01 D83 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11103&r= |
| By: | Ambuehl, Sandro (Dept. of Economics, University of Zurich); Thysen, Heidi Christina (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | Good decision-making requires understanding the causal impact of our actions. Often, we only have access to correlational data that could stem from multiple causal mechanisms with divergent implications for choice. Our experiments comprehensively characterize choice when subjects face conflicting causal interpretations of such data. Behavior primarily reflects three types: following interpretations that make attractive promises, choosing cautiously, and assessing the fit of interpretations to the data. We characterize properties of interpretations that obscure bad fit to subjects. Preferences for more complex models are more common than those reflecting Occam’s razor. Implications extend to the Causal Narratives and Model Persuasion literatures. |
| Keywords: | Decision-making; Causal mechanisms; Causal Narratives; Model Persuasion; Causal interpretations |
| JEL: | C91 D01 D83 |
| Date: | 2024–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhheco:2024_007&r= |
| By: | Keyu Wu; Ernst Fehr; Sean Hofland; Martin Schonger |
| Abstract: | Ambiguous prospects are ubiquitous in social and economic life, but the psychological foundations of behavior under ambiguity are still not well understood. One of the most robust empirical regularities is the strong correlation between attitudes towards ambiguity and compound risk which suggests that compound risk aversion may provide a psychological foundation for ambiguity aversion. However, compound risk aversion and ambiguity aversion may also be independent psychological phenomena, but what would then explain their strong correlation? We tackle these questions by training a treatment group’s ability to reduce compound to simple risks, and analyzing how this affects their compound risk and ambiguity attitudes in comparison to a control group who is taught something unrelated to reducing compound risk. We find that aversion to compound risk disappears almost entirely in the treatment group, while the aversion towards both artificial and natural sources of ambiguity remain high and are basically unaffected by the teaching of how to reduce compound lotteries. Moreover, similar to previous studies, we observe a strong correlation between compound risk aversion and ambiguity aversion, but this correlation only exists in the control group while in the treatment group it is rather low and insignificant. These findings suggest that ambiguity attitudes are not a psychological relative, and derived from, attitudes towards compound risk, i.e., compound risk aversion and ambiguity aversion do not share the same psychological foundations. While compound risk aversion is primarily driven by a form of bounded rationality – the inability to reduce compound lotteries – ambiguity aversion is unrelated to this inability, suggesting that ambiguity aversion may be a genuine preference in its own right. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:zur:econwp:444&r= |