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on Cognitive and Behavioural Economics |
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Issue of 2025–08–18
four papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Esslinger, Anna; Pfeil, Katharina; Feld, Lars P. |
| Abstract: | Are the effects of tax aversion on labor supply symmetric? In a real-effort online experiment, participants are exposed to manipulated wages and taxes after first experiencing the same reference wage. We find no significant differences in their productivity; however, we find significant asymmetries in fairness perceptions of the treatments. We find that tax increases are viewed as more unfair than equivalent wage decreases and tax decreases are viewed as more fair than equivalent wage increases. Additionally, the negative effect of tax increases is larger than the positive effect of tax decreases. However, we find little to no evidence that these asymmetric fairness perceptions significantly shape working behavior. |
| Keywords: | Tax Aversion, Loss Aversion, Labor Supply Asymmetry, Online Experiment |
| JEL: | H20 H30 D91 J22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:aluord:323932 |
| By: | Andrej Angelovski (Middlesex University Business School); Praveen Kujal (Economic Science Institute, Chapman University and Middlesex University Business School); Jose M. Ortiz (Zayed University) |
| Abstract: | We study how three widely discussed cues—source of income (merit vs luck), own performance, and information about others’ work status and performance—shape redistribution. Prior to the dictator game, all 306 dictators and most of the 306 recipients complete the same real-effort matrix task in an online experiment that would yield either $4 or $1 for the dictators. In the Performance treatment the dictator’s payoff is based on their performance; in Luck, it is assigned by a 50-50 draw. We find that: (i) Earned entitlement is prevalent for high-performing dictators: they keep more for themselves; (ii) Earned entitlement is conditional on performance or luck where high-performing dictators keep more when their high payoff is earned and give more when luck dictated the high payoff; (iii) Regarding recipients, deservingness arises from working and not performance. Dictators give around 20% more to anyone who worked, regardless of others’ performance. Taken together, the results show that dictators use own performance to justify keeping a larger share, yet apply a far coarser rule to others, i.e. they reward work and ignore relative performance. The findings refine the notion of earned entitlement and highlight asymmetric fairness criteria in redistributions. |
| Keywords: | Redistribution, Earned Entitlement, Deservingness, Luck, Performance. |
| JEL: | D31 D91 C91 D63 D64 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:chu:wpaper:25-07 |
| By: | Zíka, Vojtěch; Alfonso, Tomáš; Flegr, Jaroslav |
| Abstract: | In an incentivized laboratory experiment (N = 212), we tested whether a measure capturing both the difference between offers in the Ultimatum and Dictator Games and their distance from zero may be a better predictor of intrinsic altruism than the commonly used Dictator Game offer. Participants took part in a within-subjects, dual-role Dictator Game and Ultimatum Game, followed by a modified version of the Die-under-the-cup Task, in which they could cheat either to benefit themselves or a charity. The experimental games were followed by the Self-Reported Altruism Scale and additional short surveys. The main results showed that although our measure outperformed the Dictator Game offer in predicting altruism, neither was significantly associated with task- or survey-based altruism. Perhaps the most interesting result emerged from the exploratory analysis: the Ultimatum–Dictator Gap—the difference between offers in the two games, and part of our proposed measure—appears to be the strongest predictor of survey-measured altruism. It also positively correlates with the time taken to make an Ultimatum Game offer (suggesting lower cognitive load when gauging the social norm) and with dishonesty. In contrast, it is negatively correlated with political orientation, with economically right-leaning participants showing a larger gap than left-leaning ones. This study offers preliminary support for the idea that integrating Dictator and Ultimatum Game offers—whether as a single gap or a more nuanced measure—may better capture altruistic tendencies than relying on the Dictator Game alone. Nonetheless, further research is needed to confirm and extend these findings. |
| Date: | 2025–07–16 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:bwz6m_v1 |
| By: | Thomas Graeber; Christopher Roth; Marco Sammon; Thomas W. Graeber |
| Abstract: | Most news stories contain both granular quantitative information and coarse categorizations. For instance, company earnings are typically reported as a dollar figure alongside categorizations, such as whether earnings beat or missed market expectations. We study the hypothesis that when a decision is harder, people rely more on easier-to-process signals: people still discriminate between coarse categories but distinguish less granularly within them, creating higher sensitivity around category thresholds but lower sensitivity elsewhere. Using stock market reactions to earnings announcements, we document that hard-to-value stocks are associated with a more pronounced S-shaped response pattern around category thresholds. Experiments that exogenously manipulate the problem difficulty provide supporting causal evidence in individual investor behavior. We then exploit variation in investor familiarity with earnings surprises of different sizes to show that returns exhibit greater sensitivity in regions with more historical density. |
| Keywords: | categorical information, numerical information, earnings surprises, cognitive constraints, behavioral finance |
| JEL: | D01 D83 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12032 |