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on Cognitive and Behavioural Economics |
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Issue of 2025–11–10
four papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Pablo Brañas-Garza (Universidad Loyola Andalucía); Antonio M. Espín (Universidad de Granada); Diego Jorrat (Universidad de Sevilla/Loyola Behavioral Lab) |
| Abstract: | We conducted an online Dictator Game experiment (N = 1, 195) to test three hypotheses about the role of monetary incentives in prosocial behavior. First, we examined whether real incentives reduce the dispersion of responses compared to hypothetical ones. Surprisingly, we found the opposite: hypothetical responses were less dispersed, with choices clustering around the egalitarian split. This pattern held in a replication (N = 308) with higher stakes (£5), offering no support for the first hypothesis. Second, we tested whether real incentives—by involving actual monetary consequences—lead to more selfish decisions, as they are expected to reveal true preferences. With £1 stakes, no significant differences emerged across conditions. However, when the stake was increased to £5, participants became more selfish under real incentives, supporting the second hypothesis only when the amount at stake is substantial. Third, we explored whether probabilistic payments differ behaviorally from certain ones. At low stakes, probabilistic incentives resembled real ones. But with higher stakes, real and probabilistic outcomes diverged, suggesting participants respond to expected value only when it is meaningful. Finally, in a separate study (N = 299), we found that many participants misunderstood hypothetical-payment instructions. Only explicit phrasing eliminated this confusion, underscoring the importance of precise wording in experimental design. |
| Keywords: | Monetary incentives, egalitarianism, hyper-altruism, selfishness, dictator game |
| JEL: | D64 D91 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:376 |
| By: | Shuige Liu; Gabriel Ziegler |
| Abstract: | Interactive decision-making relies on strategic reasoning. Two prominent frameworks capture this idea. One follows a structural perspective, exemplified by level-k and Cognitive Hierarchy models, which represent reasoning as an algorithmic process. The other adopts an epistemic perspective, formalizing reasoning through beliefs and higher-order beliefs. We connect these approaches by "Lifting" static complete-information games into incomplete-information settings where payoff types reflect players' levels. Within this unified framework, reasoning is represented through mathematically explicit and transparent belief restrictions. We analyze three instances: downward rationalizability, a robust benchmark concept; and two refinements, L-rationalizability and CH-rationalizability, which provide epistemic foundations---albeit with a nuance---for the classic level-k and Cognitive Hierarchy models, respectively. Our results clarify how reasoning depth relates to behavioral predictions, distinguish cognitive limits from belief restrictions, and connect bounded reasoning to robustness principles from mechanism design. The framework thus offers a transparent and tractable bridge between structural and epistemic approaches to reasoning in games. |
| Keywords: | bounded reasoning, behavioral game theory, level-k, cognitive hierarchy, epistemic game theory, belief restrictions, Δ-rationalizability, robustness |
| JEL: | C72 D82 D83 D90 |
| Date: | 2025–10–20 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0079 |
| By: | Kamei, Kenju; Tabero, Katy |
| Abstract: | It is well-known that efficiency often fails to improve in public goods games with peer-to-peer punishment when counter-punishment is possible. This paper experimentally demonstrates, for the first time, that the effects of sanctioning institutions are modest, regardless of the decision-making format (individual or team). In the “team” conditions, subjects are randomly assigned to teams of three, and make joint decisions through communication. Their dialogue provides valuable insights into the motivations behind (counter-)punishment, as well as the resulting behavioral effects. A coding exercise reveals that first-order punishments (and counter-punishments) are primarily emotional responses to peers’ low contributions (and first-order punishments, respectively). |
| Keywords: | C92, D01, H49 |
| JEL: | C92 D01 H41 H49 |
| Date: | 2025–09–03 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126063 |
| By: | Prati, Alberto; Saucet, Charlotte |
| Abstract: | In recent years, there has been an increasing interest in motivated memory as a psychological determinant of economic outcomes. According to motivated memory, people tend to better recall pleasant information because it serves their psychological needs. Another phenomenon, however, predicts the same pattern: According to mood congruence, pleasant information is easier to recall for individuals in nonnegative mood, regardless of any psychological needs. Since most people tend to have some need for self-esteem and to experience more positive than negative feelings during the day, the two phenomena predict similar outcomes in most ordinary situations, but not all. To test the predictive power of these two phenomena, we collect data from a laboratory experiment and from a nationally representative survey. We study how individuals in a temporarily induced negative mood (via a video clip) or those who report a low baseline mood (relative to the population) recall negative feedback. Our results meet the predictions of motivated memory: Individuals better recall positive than negative feedback, even when they are in negative mood. Motivated memory is not just a matter of mood. |
| Keywords: | experiment; feedback; mood congruence; motivated beliefs; motivated memory; selective recall |
| JEL: | J1 |
| Date: | 2025–10–20 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129991 |