|
on Cognitive and Behavioural Economics |
|
Issue of 2025–06–09
five papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Bahník, Štěpán (University of Economics, Prague); Houdek, Petr (University of Economics in Prague); Hudik, Marek; Say, Nicolas |
| Abstract: | Honest individuals can strategically assume positions of power to prevent dishonest individuals from taking these positions. We conducted a laboratory experiment where participants were given two versions of an incentivized prediction task, one of which allowed cheating. Cheating on the task led a charity to lose endowed money. By introducing an auction for a limited spot in the cheating-enabling version, we examined whether honest participants bid in the auction to prevent dishonest participants from cheating and thereby harming the charity. We found that such behavior was rare, with at most 2.2% of participants engaging in it. Furthermore, the size of the charity loss and the presence of information about cheating of others did not affect bidding in the auction and cheating in the task. The participants willing to pay for the cheating-enabling version of the task did so primarily for their own gain. The prosocial preferences of honest individuals are not strong enough to prevent dishonest individuals from seizing positions of power, and only a few honest individuals are prepared to combat dishonesty actively. |
| Date: | 2025–05–29 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:gsa7k_v1 |
| By: | Jeanne Hagenbach (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Nicolas Jacquemet (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Philipp Sternal (UZH - Universität Zürich [Zürich] = University of Zurich) |
| Abstract: | We propose a two-stage experiment in which people receive feedback about their relative intelligence. This feedback is a noisy message reminded at every stage, so that subjects cannot forget this ego-relevant information. Instead, we exogenously vary whether the informativeness of the message is reminded in the second stage. We investigate how this treatment variation affects the informativeness reported by subjects, and their posterior beliefs about their intelligence. We show that subjects report informativeness in a self-serving way: subjects with negative messages report that these messages are significantly less informative in the absence of reminder than with it. We also show that the lack of reminder about message informativeness allows subjects to keep a better image of themselves. These results are confirmed by complementary treatments in which we decrease messages informativeness: subjects tend to inflate the informativeness of positive messages that should now be interpreted as bad news. |
| Keywords: | Controlled experiment, Motivated beliefs, Overconfidence, Noisy feedback |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:cesptp:halshs-05064934 |
| By: | Thomas Graeber (Harvard Business School); Christopher Roth (University of Cologne, CEPR, NHH Norwegian School of Economics, & Max Planck Institute for Research on Collective Goods); Marco Sammon (Harvard Business School) |
| Abstract: | Real-world news environments comprise both granular quantitative information and coarse categorizations. For instance, company earnings are reported as a dollar figure alongside categorizations, such as whether earnings beat or missed market expectations. When processing capacity is limited, these components may compete for attention. We study the hypothesis that more severe processing constraints increase the relative reliance on coarser signals: people still discriminate between categories but distinguish less granularly within them, creating higher sensitivity around category thresholds but lower sensitivity elsewhere. Using stock market reactions to earnings announcements as our empirical setting, we document that hard-to-value stocks are associated with a more pronounced S-shaped response pattern around category thresholds. Naturalistic experiments that exogenously manipulate processing constraints provide supporting causal evidence in individual investor behavior. We then study two determinants of processing constraints in the field. First, more common sizes of surprise may be processed more precisely. Indeed, regions with more historical mass exhibit far higher return sensitivity. Second, a surprise about the category realization may capture attention, leaving less capacity to process the numerical signal. We find that category surprises, e.g., a profit when a loss was expected, are associated with diminished sensitivity to numerical earnings information. |
| Keywords: | Categories, Numbers, Processing Constraints, Earnings News |
| JEL: | D01 D83 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:364 |
| By: | Yevgeny Mugerman; Eyal Winter; Tomer Yafeh |
| Abstract: | We explore strategic betting in competitive environments with multiple participants and potential winners. We examine two scenarios: an “inclusive†low-competition scenario with many winners and an “exclusive†high-competition scenario with few winners. Using a simple model, we illustrate the strategic insights in these scenarios and present experimental results that align with our predictions. In the experiment, participants made repeated bets with feedback on past results and their payoffs. In the inclusive scenario, all but the worst guessers were rewarded, while in the exclusive scenario, only the top guessers received rewards. Our findings show that in the inclusive scenario, participants exhibit herding behavior by coordinating their bets, while in the exclusive scenario, they diversify their bets across multiple options. The main general insight of our findings is that in moderate competitions, one tends to join the majority to avoid standing out in case of failure, whereas in intense competitions, one tends to differentiate oneself from one’s peers to ensure that success stands out. This insight is relevant for a broad domain of strategic interactions. |
| Keywords: | Experimental Economics, Competitive Decision-Making, Herding Behavior, Divergence Strategy, Inclusive vs. Exclusive Scenarios, Multi-Winner Competition |
| JEL: | C9 D7 D8 L1 M3 G1 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:lan:wpaper:423283787 |
| By: | Yuhong Gao (Fudan University [Shanghai]); Thierry Blayac (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Marc Willinger (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier) |
| Abstract: | We conducted a study to assess the impact of a delegation option on moral decision-making using an online questionnaire based on the Moral Machine paradigm1. Interestingly, the inclusion of a delegation option did not significantly alter individuals' moral tradeoffs. Nevertheless, when presented with the option, most participants opted for delegation as a means to avoid the moral burden of challenging decisions, regardless of the delegate's profile. Factors influencing this choice included gender (favoring females), occupation (doctors), education level (lower), a strong sense of altruism, less frequent driving, and greater risk aversion. Additionally, participants displayed a preference for saving more lives, with particular emphasis on babies, pregnant women, doctors, and law-abiding victims, indicating a general aversion to death. |
| Keywords: | Transport Policy Moral machine paradigm, moral dilemma, delegation, freedom of choice, behavioral economics |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05058037 |