nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2025–09–08
two papers chosen by
Marco Novarese, Università degli Studi del Piemonte Orientale


  1. Model Uncertainty By Robin Musolff; Florian Zimmermann
  2. Integrative Experiments Identify How Punishment Impacts Welfare in Public Goods Games By Mohammed Alsobay; David G. Rand; Duncan J. Watts; Abdullah Almaatouq

  1. By: Robin Musolff; Florian Zimmermann
    Abstract: Mental models help people navigate complex environments. This paper studies how people deal with model uncertainty. In an experiment, participants estimate a company’s value, facing uncertainty about which one of two models correctly determines its true value. Using a between subjects design, we vary the degree of model complexity. Results show that in high-complexity conditions people fully neglect model uncertainty in their actions. However, their beliefs continue to reflect model uncertainty. This disconnect between beliefs and actions suggests that complexity leads to biased decision-making, while beliefs remain more nuanced. Furthermore, we show that complexity, via full uncertainty neglect, leads to higher confidence in the optimality of own actions.
    Keywords: Mental Models, Beliefs, Attention, Confidence, Representations
    JEL: D01 D83
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_697
  2. By: Mohammed Alsobay; David G. Rand; Duncan J. Watts; Abdullah Almaatouq
    Abstract: Punishment as a mechanism for promoting cooperation has been studied extensively for more than two decades, but its effectiveness remains a matter of dispute. Here, we examine how punishment's impact varies across cooperative settings through a large-scale integrative experiment. We vary 14 parameters that characterize public goods games, sampling 360 experimental conditions and collecting 147, 618 decisions from 7, 100 participants. Our results reveal striking heterogeneity in punishment effectiveness: while punishment consistently increases contributions, its impact on payoffs (i.e., efficiency) ranges from dramatically enhancing welfare (up to 43% improvement) to severely undermining it (up to 44% reduction) depending on the cooperative context. To characterize these patterns, we developed models that outperformed human forecasters (laypeople and domain experts) in predicting punishment outcomes in new experiments. Communication emerged as the most predictive feature, followed by contribution framing (opt-out vs. opt-in), contribution type (variable vs. all-or-nothing), game length (number of rounds), peer outcome visibility (whether participants can see others' earnings), and the availability of a reward mechanism. Interestingly, however, most of these features interact to influence punishment effectiveness rather than operating independently. For example, the extent to which longer games increase the effectiveness of punishment depends on whether groups can communicate. Together, our results refocus the debate over punishment from whether or not it "works" to the specific conditions under which it does and does not work. More broadly, our study demonstrates how integrative experiments can be combined with machine learning to uncover generalizable patterns, potentially involving interactions between multiple features, and help generate novel explanations in complex social phenomena.
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:arx:papers:2508.17151

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