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on Cognitive and Behavioural Economics |
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Issue of 2026–08–17
four papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Gill, David (Purdue University); Qiao, Zhongheng (Purdue University) |
| Abstract: | Workers and organizations routinely choose the complexity of tasks that they undertake. We study how cognitive ability and overconfidence shape this choice of task complexity, both theoretically and experimentally. Consistent with our model, we find that more cognitively able individuals choose more complex tasks. Conditional on cognitive ability, we find that more overconfident individuals also choose more complex tasks. About 80% of subjects pick their payoff-maximizing task, and higher cognitive ability predicts more efficient choices of task complexity. But errors are strikingly one-sided: nearly all who fail to choose optimally pick tasks that are too complex. Our findings suggest that organizations should pair task menus and incentives for choosing more complex tasks with information and feedback that help workers assess their ability and probability of success. This preserves the benefits of self-selection while reducing costly overreach. |
| Keywords: | cognitive ability, complexity, task choice, choice efficiency, overconfidence, experiment |
| JEL: | C91 D03 D83 D91 J24 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18834 |
| By: | Gary Charness; Francesco Feri; Matthew Jackson; Miguel Melendez-Jimenez; Matthias Sutter |
| Abstract: | We provide a first causal analysis of the behavioral consequences of the friendship paradox—the fact that people’s friends in a network have more connections than average. We find that people’s behavior is biased by their network position: they do not best respond to what they should infer the average behavior of the population to be, but instead simply to the average behavior of their friends. Moreover, we find that they fail to learn to overcome such a bias when relocated within the network, varying their observational environment. In these games of complements, the friendship paradox generates a systematic upward distortion in actions, increases behavioral dispersion, and persists despite learning opportunities. |
| Keywords: | friendship paradox, networks, learning, experiment |
| JEL: | C91 D01 D85 D90 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12905 |
| By: | Charness, Gary (University of California, Santa Barbara); Feri, Francesco (Royal Holloway University of London); Jackson, Matthew (Stanford University); Melendez-Jimenez, Miguel (University of Malaga); Sutter, Matthias (Max Planck Institute for Behavioral Economics) |
| Abstract: | We provide a first causal analysis of the behavioral consequences of the friendship paradox—the fact that people’s friends in a network have more connections than average. We find that people’s behavior is biased by their network position: they do not best respond to what they should infer the average behavior of the population to be, but instead simply to the average behavior of their friends. Moreover, we find that they fail to learn to overcome such a bias when relocated within the network, varying their observational environment. In these games of complements, the friendship paradox generates a systematic upward distortion in actions, increases behavioral dispersion, and persists despite learning opportunities. |
| Keywords: | friendship paradox, networks, learning, experiment |
| JEL: | C91 D01 D85 D90 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18861 |
| By: | Victor Gonzalez-Jimenez; Patricio S. Dalton; Charles N. Noussair |
| Abstract: | To enhance workers' motivation, organizations often offer monetary bonuses that are linked to meeting production goals. We argue that when workers set these production goals and are sufficiently loss averse, offering a monetary bonus for goal achievement may backfire. The rationale is as follows: while self-chosen goals can act as reference points that motivate loss-averse workers to increase effort and earnings, a monetary bonus for goal achievement may crowd-out the motivation to set an ambitious goal because workers will not want to miss the bonus offered. Hence, monetary bonuses will induce workers set more conservative goals, attenuating the motivational effects of goal setting. We show experimental evidence consistent with this mechanism. |
| Keywords: | Loss aversion, Goals, Monetary and Non-monetary incentives |
| JEL: | D86 D90 C91 D81 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:exc:wpaper:2024-03 |