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on Cognitive and Behavioural Economics |
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Issue of 2025–10–20
four papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Enrico G. De Giorgi (University of St. Gallen - SEPS: Economics and Political Sciences; Swiss Finance Institute); Thierry Post (Graduate School of Business of Nazarbayev University); Askhat Omar (Nazarbayev University - Graduate School of Business) |
| Abstract: | We present experimental evidence of systematic decision errors in dynamic portfolio choice. Participants created contingency plans in a lattice model. When returns were independent and identically distributed, most plans were near-optimal for plausible risk preferences. However, under dynamic probabilities, most plans were inefficient, even by First-degree Stochastic Dominance. Allocations showed a lack of sensitivity to probability shifts, consistent with myopic loss aversion. Decision quality improved when participants compared their original plan to precomputed optimal plans. Results highlight the importance of problem framing in dynamic choice and support a libertarian paternalistic approach to choice architecture design. |
| Keywords: | Dynamic portfolio choice, choice experiments, myopic loss aversion |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2578 |
| By: | Din Amir; Bar Hoter; Moran Koren |
| Abstract: | This study examines strategic behavior in crowdfunding using a large-scale online experiment. Building on the model of Arieli et. al 2023, we test predictions about risk aversion (i.e., opting out despite seeing a positive private signal) and mutual insurance (i.e., opting in despite seeing a negative private signal) in a static, single-shot crowdfunding game, focusing on informational incentives rather than dynamic effects. Our results validate key theoretical predictions: crowdfunding mechanisms induce distinct strategic behaviors compared to voting, where participants are more likely to follow private signals (odds ratio: 0.139, $p |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.14872 |
| By: | Andrzej Baranski; Ernesto Reuben; Arno Riedl |
| Abstract: | In a laboratory experiment, we study the role of fairness ideals as focal points in coordination problems in homogeneous and heterogeneous groups. We elicit the normatively preferred behavior about how a subsequent coordination game should be played. In homogeneous groups, people share a unique fairness ideal how to solve the coordination problem, whereas in heterogeneous groups, multiple conflicting fairness ideals prevail. In the coordination game, homogeneous groups are significantly more likely than their heterogeneous counterparts to sustain efficient coordination. The reason is that homogeneous groups coordinate on the unique fairness ideal, whereas heterogeneous groups disagree on the fairness ideal to be played. In both types of groups, equilibria consistent with fairness ideals are most stable. Hence, the difference in coordination success between homogeneous and heterogeneous groups occurs because of the normative disagreement in the latter types of group, making it much harder to reach an equilibrium at a fairness ideal. |
| Keywords: | fairness ideals, focal points, coordination, cooperation, experiment |
| JEL: | H41 C92 D63 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12195 |
| By: | Lammers, Wouter; Puimège, Eva; Pattyn, Valérie; Van de Walle, Steven |
| Abstract: | Civil servants often have to make decisions supported by uncertain information, yet it remains unclear how they prioritize different types of uncertainty. We distinguish shallow, quantified uncertainty from deep, ambiguous uncertainty. Ambiguity aversion suggests that shallow uncertainty information will distract attention away from deep uncertainty information, potentially leading to overconfident decisions. This eye-tracking study investigates how civil servants read and use deep and shallow uncertainty information regarding a procurement decision. Contrary to expectations, we find that shallow uncertainty does not distract from deep uncertainty but boosts concentration towards it. The presence of shallow uncertainty impacts decision-making but not decision confidence. |
| Date: | 2025–10–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:cpyra_v1 |