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on Cognitive and Behavioural Economics |
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Issue of 2025–05–05
five papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Alston, Mackenzie (University of Illinois at Urbana-Champaign); Deryugina, Tatyana (University of Illinois at Urbana-Champaign); Shurchkov, Olga (Wellesley College) |
| Abstract: | There is much disagreement about the extent to which financial incentives motivate study participants. We elicit preferences for being paid for completing a survey, including a one-in-twenty chance of winning a $100 electronic gift card, a guaranteed electronic gift card with the same expected value, and an option to refuse payment. More than twice as many participants chose the lottery as chose the guaranteed payment. Given that most people are risk averse, this pattern suggests that factors beyond risk preferences—such as hassle costs—influenced their decision-making. Almost 20 percent of participants actively refused payment, demonstrating low monetary motivation. We find both systematic and unobserved heterogeneity in the characteristics of who turned down payment. The propensity to refuse payment is more than four times as large among individuals 50 and older compared to younger individuals, suggesting a tradeoff between financially motivating participants and obtaining a representative sample. Overall, our results suggest that modest electronic gift card payments violate key requirements of Vernon Smith’s induced value theory. |
| Keywords: | induced value theory, motivation, incentives |
| JEL: | C83 C90 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17812 |
| By: | Jiang, Shuguang (Shandong University); Villeval, Marie Claire (CNRS); Zhang, Zhengping (Shandong University); Zheng, Jie (Shandong University) |
| Abstract: | We experimentally study how economic prospects and power shifts affect the risk of conflict through a dynamic power rivalry game. Players decide whether to maintain the status quo or challenge a rival under declining, constant, or growing economic prospects. We find that conflict rates are highest when economic prospects decline and lowest when they improve. A behavioral model incorporating psychological costs and reciprocity can explain these differences. A survey on U.S.-China relations supports the real-world relevance of these findings. Inspired by the Thucydides’s Trap, this study highlights how economic expectations shape conflict dynamics, offering key insights into geopolitical stability. |
| Keywords: | conflict, economic prospects, Thucydides’s Trap, power shift, experiment |
| JEL: | C83 C91 D74 D91 F51 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17823 |
| By: | Riedl, Arno (Maastricht University); Schmeets, Hans (Maastricht University); Werner, Peter (Maastricht University) |
| Abstract: | Using an artefactual field experiment, we elicit revealed preferences for solidarity of different age groups toward the same and other age groups among a large, diverse Dutch population sample. Preferences are measured with a solidarity game and linked to a unique administrative database, allowing exploration of demographic and socio-economic correlates. In the game, a winner of a money amount is asked ex-ante how much they are willing to transfer to a loser who gets nothing. Participants, on average, show a strong preference for ex-ante solidarity, willing to transfer about 40% of the money. However, participants are overly pessimistic about what others will transfer. We also observe age-based discrimination, as many show stronger solidarity with their own age group. Using questionnaires, we measure stated preferences in various domains and find revealed preferences correlate with some self-reported attitudes and with opinions on social security and solidarity-related field behavior. |
| Keywords: | social security systems, group identity, age groups, solidarity, large population sample |
| JEL: | D63 D64 D91 C93 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17858 |
| By: | Chiara Aina; Florian H. Schneider |
| Abstract: | We study how individuals update their beliefs in the presence of competing data-generating processes, or models, that could explain observed data. Through experiments, we identify the weights participants assign to different models and find that the most common updating rule gives full weight to the model that best fits the data. While some participants assign positive weights to multiple models—consistent with Bayesian updating—they often do so in a systematically biased manner. Moreover, these biases in model weighting frequently lead participants to become more certain about a state regardless of the data, violating a core property of Bayesian updating. |
| Keywords: | belief updating, narratives, mental models, experiments |
| JEL: | D83 D90 C90 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11757 |
| By: | Baumgartner, Stefanie S. (University of Fribourg); Galeotti, Fabio (CNRS, GATE); Madies, Thierry (University of Fribourg); Villeval, Marie Claire (CNRS) |
| Abstract: | Trust plays a crucial role in refugees’ integration. This study examines how social information about trust levels among peers from home and host countries affects non-Western refugees’ trust. Using a trust game, we measured experimentally trust levels among Swiss citizens, Turkish refugees, and Afghan refugees. We found that Turkish refugees exhibited higher trust levels than Afghan refugees, but no significant trust differences were found between Swiss participants and either refugee group. Turkish refugees adjusted their trust to match Swiss levels when receiving social information, but observation by compatriots reduced this effect. By contrast, Afghan refugees exhibited a more limited response to social information, except when told their behavior would be revealed, which led them to align more closely with Swiss trust levels. These findings highlight the complex impact of social information on refugee trust behavior and suggest that trust can be a social norm. |
| Keywords: | refugees, trust, social information, lab-in-the-field experiment |
| JEL: | C91 D83 D91 F22 J61 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17822 |