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on Cognitive and Behavioural Economics |
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Issue of 2026–04–06
five papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Snir, Avichai; Levy, Dudi; Wang, Dian; Chen, Haipeng (Allan); Levy, Daniel |
| Abstract: | We use survey experiments to demonstrate that manipulating participants’ perceptions of the context can affect their decisions. We ran three survey experiments in the U.S. and Israel with participants from both economics and non-economics majors. In the experiments, participants face a tradeoff between profit maximization (market norm) and workers’ welfare (social norm). Our experimental setup enables us to discriminate between the self-selection and indoctrination effects. Existing studies find that economics and non-economics students make different choices in such situations, which the studies argue is because of differences in personality traits between economics students and others. While such differences might exist, we argue that context also plays an important role. Using priming to manipulate the context, we demonstrate that when participants receive cues signaling that their decision has an economic context, both economics and non-economics students tend to maximize profits. When participants receive cues emphasizing social norms, on the other hand, both economics and non-economics students are less likely to maximize profits. We find that the role of context in determining behavior is at least as large as the baseline differences between economics and non-economics students. |
| Keywords: | Market Norms; Social Norms; Self-Selection; Indoctrination; Self-Interest; Economic Man; Rational Choice; Fairness; Experimental Economics; Laboratory Experiments; Priming; Economists vs. Non-Economists |
| JEL: | A11 A12 A13 A20 B40 C90 C91 D01 D63 D91 P10 |
| Date: | 2026–03–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128298 |
| By: | Christiane Buschinger (Johannes Gutenberg University, Germany); Markus Eyting (Johannes Gutenberg University, Germany); Florian Hett (Johannes Gutenberg University, Germany); Judd Kessler (The Wharton School of the University of Pennsylvania, USA) |
| Abstract: | How does polarization — as measured by mistreatment of political rivals — spread? In an online experiment, participants choose between splitting financial resources equally or discriminating against a supporter of the opposing political party. We vary the information subjects receive about others’ choices and justifications for discrimination. Exposure to extreme justifications for discrimination increases discrimination — particularly in a polarized environment, when many others are already discriminating — and it leads participants to adopt more extreme justifications themselves. Our findings suggest a self-reinforcing dynamic that may fuel polarization: Exposure to extreme statements increases polarization and the prevalence of extreme reasoning. |
| Keywords: | political polarization, peer effects, justifications, outgroup discrimination, social norms |
| JEL: | C9 D01 D9 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:jgu:wpaper:2602 |
| By: | Alexander Ugarov; Arya Gaduh; Peter McGee |
| Abstract: | We use a laboratory experiment to study preferences over false-positive and false-negative rates of warning signals for an adverse event with a known prior. We find that subjects decrease their demand with signal quality, but less than predicted by our theory. There is asymmetric under-responsiveness by prior: for a low (high) prior, their willingness-to-pay does not fully adjust for the increase in the false-positive (false-negative) costs. We show that neither risk preference nor Bayesian updating skills can fully explain our results. Our results are most consistent with a decision-making heuristic in which subjects do not distinguish between false-positive and false-negative errors. |
| JEL: | C91 D81 D84 D91 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34992 |
| By: | Sandro Ambuehl; Rahul Bhui; Heidi C. Thysen |
| Abstract: | A rapidly growing literature in economics studies how people form beliefs about the causal structures that link economic variables, and what happens when those beliefs are mistaken. We survey this literature and connect it to a large body of related research in cognitive science. After providing an accessible introduction to causal Directed Acyclic Graphs, the dominant modeling approach, we review theory and evidence addressing three nested questions: how individuals reason within known structures, how they estimate their parameters, and how they learn causal structures. We then discuss methodological challenges and describe applications in microeconomics, macroeconomics, political economy, and business. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.29070 |
| By: | Mikhail Freer; Thilo Klein; Josu\'e Ortega |
| Abstract: | We conduct the first laboratory school choice experiment in which parents-the relevant decision makers in the field-are the experimental subjects. We compare Deferred Acceptance (DA) with two manipulable but potentially more efficient alternatives: Efficiency-Adjusted Deferred Acceptance (EADA) and the Rank-Minimizing mechanism (RM). We find that all mechanisms are frequently manipulated, with no significant differences in truth-telling rates. Parents and students manipulate at similar rates, supporting the external validity of student-based experiments, though students make significantly more obvious errors, suggesting parents' deviations are more deliberate. Despite widespread manipulation, the predicted welfare-stability tradeoff largely survives: DA never produces Pareto-efficient allocations yet generates little justified envy; whereas RM delivers substantial efficiency gains at a meaningful stability cost. EADA occupies a middle ground: its efficiency gains over DA are modest and imprecisely estimated yet double justified envy. Higher cognitive ability is associated with more deviations, and under EADA with worse outcomes. While DA does not induce truth-telling, it is the only mechanism in which manipulation never pays off and rarely changes outcomes. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.24615 |