nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2012‒12‒06
nine papers chosen by
Matthew Baker
City University of New York

  1. Yoga beyond wellness: Meditation, trust and cooperation By Di Bartolomeo Giovanni; Papa Stefano; Bellomo Saverio
  2. Trust, Values and False Consensus By Butler, Jeff; Giuliano, Paola; Guiso, Luigi
  3. The Effects of Group Composition and Fractionalization in a Public Goods Game: An Agent-Based Simulation By Lucas, Pablo; de Oliveira, Angela C.M.; Banuri, Sheheryar
  4. On the Nature of Reciprocity: Evidence from the Ultimatum Reciprocity Measure By Andreas Nicklisch; Irenaeus Wolff
  5. Heterogeneous treatment effects in groups By Riener, Gerhard; Wiederhold, Simon
  6. The triadic design to identify trust and reciprocity: Extensions and robustness By Di Bartolomeo Giovanni; Papa Stefano
  7. You Owe Me By Malmendier, Ulrike; Schmidt, Klaus M.
  8. Nobody Likes a Rat: On the Willingness and Consequences of Reporting Lies By Reuben, Ernesto; Stephenson, Matt
  9. Using Neural Data to Test a Theory of Investor Behavior: An Application to Realization Utility By Cary Frydman; Nicholas Barberis; Colin Camerer; Peter Bossaerts; Antonio Rangel

  1. By: Di Bartolomeo Giovanni; Papa Stefano; Bellomo Saverio
    Abstract: Our research aims to find out whether meditation has a positive impact on trust and cooperation. By comparing the behavior of agents exposed to meditation before playing an investment game to others not exposed, we find that the formers show more trust on average than the latters. Meditation seems to reduce risk aversion and “competitiveness” among people inducing agents to behave in a more cooperative (and efficient) way.
    Keywords: Other-regarding preferences, trust, reciprocity, investment game, frame effect, polarization, meditation
    JEL: D03 C91 D83
    Date: 2012–11
  2. By: Butler, Jeff; Giuliano, Paola; Guiso, Luigi
    Abstract: Trust beliefs are heterogeneous across individuals and, at the same time, persistent across generations. We investigate one mechanism yielding these dual patterns: false consensus. In the context of a trust game experiment, we show that individuals extrapolate from their own type when forming trust beliefs about the same pool of potential partners - i.e., more (less) trustworthy individuals form more optimistic (pessimistic) trust beliefs - and that this tendency continues to color trust beliefs after several rounds of game-play. Moreover, we show that one's own type/trustworthiness can be traced back to the values parents transmit to their children during their upbringing. In a second closely-related experiment, we show the economic impact of mis-calibrated trust beliefs stemming from false consensus. Miscalibrated beliefs lower participants' experimental trust game earnings by about 20 percent on average.
    Keywords: culture; false consensus; trust; trustworthiness
    JEL: A1 A12 D1 Z1
    Date: 2012–11
  3. By: Lucas, Pablo; de Oliveira, Angela C.M.; Banuri, Sheheryar
    Abstract: Behavioural economics highlights the role of social preferences in economic decisions. Further, populations are heterogeneous; suggesting that group composition may impact the ability to sustain voluntary public goods contributions. This parallels researc
    Keywords: social preferences, agent-based simulation, group composition, beliefs
    Date: 2012
  4. By: Andreas Nicklisch (Max Planck Institute for Research on Collective Goods, University of Bonn, Germany); Irenaeus Wolff (Thurgau Institute of Economics at the University of Konstanz, Department of Economics, Germany)
    Abstract: We experimentally show that current models of reciprocity are incomplete in a systematic way using a new variant of the ultimatum game that provides second-movers with a marginal-cost-free punishment option. For a substantial proportion of the population, the degree of first-mover unkindness determines the severity of punishment actions even when marginal costs are absent. The proportion of these participants strongly depends on a treatment variation: higher fixed costs of punishment more frequently lead to extreme responses. The fractions of purely selfish and inequity-averse participants are small and stable. Among the variety of reciprocity models, only one accommodates (rather than predicts) parts of our findings. We discuss ways of incorporating our findings into the existing models.
    Keywords: Distributional fairness, experiments, intention-based fairness, reciprocity, ultimatum bargaining
    JEL: C91 D03 D63
    Date: 2012–11–19
  5. By: Riener, Gerhard; Wiederhold, Simon
    Abstract: We show in a laboratory experiment that the same method of group induction carries different behavioral consequences. These heterogeneous treatment effects can be directly related to the quality of the relationship established between the subjects. Our results indicate the importance of manipulation checks in group-formation tasks in economic experiments. --
    Keywords: Group induction,Control,Laboratory experiment,Manipulation check
    JEL: C92 M54 D03 J22
    Date: 2012
  6. By: Di Bartolomeo Giovanni; Papa Stefano
    Abstract: Our paper reconsiders the triadic design proposed by Cox (2004) to identify trust and reciprocity in investment games. Specifically, we extend the design in two directions. First, we elicit expectations by a fixed-fee incentive scheme and test the coherence of them with the triadic outcomes. We expect that if trust is reported by the triadic design, investors’ expected gains should be also observed. Second, we collect information about participants’ choices by using both direct-response (as Cox) and strategy method. By the latter we are able to control reciprocity for initial inequality, which is endogenous when reciprocity is investigated. Finally, we test the existence of an emotional bias, i.e. we test if expectations mismatches induce participant to change actual choices from the planned ones.
    Keywords: Conditional and unconditional motivations, other-regarding preferences, trust, reciprocity, investment game, expectation, inequality, strategy method
    JEL: D03 C91 D83
    Date: 2012–11
  7. By: Malmendier, Ulrike; Schmidt, Klaus M.
    Abstract: In many cultures and industries gifts are given in order to influence the recipient, often at the expense of a third party. Examples include business gifts of firms and lobbyists. In a series of experiments, we show that, even without incentive or informational effects, small gifts strongly influence the recipient’s behavior in favor of the gift giver, in particular when a third party bears the cost. Subjects are well aware that the gift is given to influence their behavior but reciprocate nevertheless. Withholding the gift triggers a strong negative response. These findings are inconsistent with the most prominent models of social preferences. We propose an extension of existing theories to capture the observed behavior by endogenizing the “reference group†to whom social preferences are applied. We also show that disclosure and size limits are not effective in reducing the effect of gifts, consistent with our model. Financial incentives ameliorate the effect of the gift but backfire when available but not provided.
    Keywords: Gift exchange; externalities; lobbyism; corruption; reciprocity; social preferences
    JEL: C91 D73 I11
    Date: 2012–11
  8. By: Reuben, Ernesto (Columbia University); Stephenson, Matt (Columbia University)
    Abstract: We investigate the intrinsic motivation of individuals to report, and thereby sanction, fellow group members who lie for personal gain. We further explore the changes in lying and reporting behavior that result from giving individuals a say in who joins their group. We find that enough individuals are willing to report lies such that in fixed groups lying is unprofitable. However, we also find that when groups can select their members, individuals who report lies are generally shunned, even by groups where lying is absent. This facilitates the formation of dishonest groups where lying is prevalent and reporting is nonexistent.
    Keywords: lying, lying aversion, whistleblowing, social norms, dishonesty
    JEL: D03 K42 M42 M14 C92
    Date: 2012–11
  9. By: Cary Frydman; Nicholas Barberis; Colin Camerer; Peter Bossaerts; Antonio Rangel
    Abstract: We use measures of neural activity provided by functional magnetic resonance imaging (fMRI) to test the "realization utility" theory of investor behavior, which posits that people derive utility directly from the act of realizing gains and losses. Subjects traded stocks in an experimental market while we measured their brain activity. We find that all subjects exhibit a strong disposition effect in their trading, even though it is suboptimal. Consistent with the realization utility explanation for this behavior, we find that activity in the ventromedial prefrontal cortex, an area known to encode the value of options during choices, correlates with the capital gains of potential trades; that the neural measures of realization utility correlate across subjects with their individual tendency to exhibit a disposition effect; and that activity in the ventral striatum, an area known to encode information about changes in the present value of experienced utility, exhibits a positive response when subjects realize capital gains. These results provide support for the realization utility model and, more generally, demonstrate how neural data can be helpful in testing models of investor behavior.
    JEL: G11
    Date: 2012–11

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