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on Evolutionary Economics |
| By: | Brekke, Kjell Arne (Department of Economics, University of Oslo); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This paper attempts to bring some central insights from behavioural economics into the economics of climate change. In particular, it discusses (i) implications of prospect theory, the equity premium puzzle and time inconsistent preferences in the choice of discount rate used in climate change cost assessments, and (ii) the implications of various kinds of social preferences for the outcome of climate negotiations. Several reasons are presented for why it appears advisable to choose a substantially lower social discount rate than the average return on investments. It also seems likely that taking social preferences into account increases the possibilities of obtaining international agreements, compared to the standard model. However, there are also effects going in the opposite direction, and the importance of sanctions is emphasised.<p> |
| Keywords: | Behavioural economics; prospect theory; equity premium puzzle; social preferences; climate negotiations. |
| JEL: | D63 Q54 |
| Date: | 2008–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0305&r=evo |
| By: | Stephen, Andrew T.; Pham, Michel Tuan |
| Abstract: | This research examines how the reliance on emotional feelings as a heuristic influences the proposal of offers in negotiations. Results from three experiments based on the classic ultimatum game show that, compared to proposers who do not rely on their feelings, proposers who rely on their feelings make less generous offers in the standard ultimatum game, more generous offers in a variant of the game allowing responders to make counteroffers, and less generous offers in the dictator game where no responses are allowed. Reliance on feelings triggers a more literal form of play, whereby proposers focus more on how they feel toward the offers themselves than on how they feel toward the possible outcomes of these offers, as if their offers were the final outcomes. Proposers relying on their feelings also tend to focus on gist-based, simpler construals of negotiations that capture only the essential aspects of the situation. |
| Keywords: | affect; emotions; heuristics; bargaining; ultimatum game; affect as information; affect heuristic; trust in feelings |
| JEL: | D81 D11 D71 A13 A12 C70 D83 |
| Date: | 2008–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8779&r=evo |
| By: | John F. Ermisch (Institute for Social and Economic Research); Diego Gambetta (Nuffield College, Oxfod); Heather Laurie (Institute for Social and Economic Research); Thomas Siedler (DIW Berlin); S.C. Noah Uhrig (Institute for Social and Economic Research) |
| Abstract: | We measure trust and trustworthiness in British society with an experiment using real monetary rewards and a sample of the British population. The study also asks the most typical survey question that aims to measure trust, showing that it does not predict ‘trust’ as measured in the experiment. Overall, about 40% of people were willing to trust a stranger in our experiment, and their trust was rewarded one-half of the time. Analysis of variation in the trust behaviour in our survey suggests that trust is more likely if people are older, their financial situation is ‘comfortable’, they are a homeowner, or they are divorced or separated. Trustworthiness is less likely if a person’s financial situation is perceived by them as ‘just getting by’ or difficult. |
| Keywords: | social trust |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2007-32&r=evo |