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on Evolutionary Economics |
| By: | Ingela Alger; Jos\'e Ignacio Rivero-Wildemauwe |
| Abstract: | We conduct a laboratory experiment using framing to assess the willingness to ``sell a lemon'', i.e., to undertake an action that benefits self but hurts the other (the ``buyer''). We seek to disentangle the role of other-regarding preferences and (Kantian) moral concerns, and to test if it matters whether the decision is described in neutral terms or as a market situation. When evaluating an action, morally motivated individuals consider what their own payoff would be if -- hypothetically -- the roles were reversed and the other subject chose the same action (universalization). We vary the salience of role uncertainty, thus varying the ease for participants to envisage the role-reversal scenario. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.13186&r= |
| By: | Jian-Qiao Zhu; Haijiang Yan; Thomas L. Griffiths |
| Abstract: | The observed similarities in the behavior of humans and Large Language Models (LLMs) have prompted researchers to consider the potential of using LLMs as models of human cognition. However, several significant challenges must be addressed before LLMs can be legitimately regarded as cognitive models. For instance, LLMs are trained on far more data than humans typically encounter, and may have been directly trained on human data in specific cognitive tasks or aligned with human preferences. Consequently, the origins of these behavioral similarities are not well understood. In this paper, we propose a novel way to enhance the utility of LLMs as cognitive models. This approach involves (i) leveraging computationally equivalent tasks that both an LLM and a rational agent need to master for solving a cognitive problem and (ii) examining the specific task distributions required for an LLM to exhibit human-like behaviors. We apply this approach to decision-making -- specifically risky and intertemporal choice -- where the key computationally equivalent task is the arithmetic of expected value calculations. We show that an LLM pretrained on an ecologically valid arithmetic dataset, which we call Arithmetic-GPT, predicts human behavior better than many traditional cognitive models. Pretraining LLMs on ecologically valid arithmetic datasets is sufficient to produce a strong correspondence between these models and human decision-making. Our results also suggest that LLMs used as cognitive models should be carefully investigated via ablation studies of the pretraining data. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2405.19313&r= |
| By: | Davis, John B.; ; (Department of Economics Marquette University; Department of Economics Marquette University) |
| Abstract: | This paper discusses the difference between mainstream and heterodox economics in terms of philosophy’s distinction between two types of temporal sequences governing events: the static, truth-tenseless before-after sequence and the dynamic, truth-tensed past-present-future sequence. Mainstream theory and optimization analysis employs the first. However, Aristotle showed long ago this implies fatalism. Heterodox explanations employ the second, which I argue implies people reflexively adjust their choices over time in a combined backward-looking and forward-looking way that rules out optimization. Central to this explanation of behavior is how uncertainty about the future is connected to uncertainty about the past. I show this can be explained in terms of how people engage in counterfactual thinking whereby their uncertainty about the future is investigated through how they re-examine their uncertainty about the past. This behavioral explanation affects how we interpret two different sets of temporal phenomena heterodoxy emphasizes: (i) irreversibility and path-dependence and (ii) emergence and cumulative causation. I argue this demonstrates the need for the open economic thinking heterodoxy employs, not the closed economic thinking the mainstream employs. |
| Keywords: | temporal sequences, fatalism, reflexive adjustment, future-past uncertainty, open economic thinking |
| JEL: | B41 B50 D01 D80 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:mrq:wpaper:2024-03&r= |
| By: | Pascaline Dupas; Marcel Fafchamps; Laura Hernandez-Nunez |
| Abstract: | We investigate the potential welfare cost of relative rank considerations using a series of vignettes and lab-in-the-field experiments with over 2, 000 individuals in Abidjan, Ivory Coast. We show that: (1) individuals judged to be of a lower rank are perceived as more likely to be sidelined from beneficial opportunities in many aspects of life; and (2) in response, individuals distort their appearance and consumption choices in order to appear of higher rank. These effects are strong and economically significant. As predicted by a simple signaling model, the distortion is larger for individuals with low (but not too low) socio-economic status. |
| JEL: | C90 D91 J70 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32491&r= |
| By: | Luca Pensieroso (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Alessandro Sommacal (University of Verona); Gaia Spolverini (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | We provide a historical decomposition of fertility in the United States by family type. We find that intergenerational coresidence was systematically associated with lower fertility than nuclear families, with the difference shrinking over time. This pattern is robust to controlling for several demographic and socioeconomic confounders. We build a simple, analytical model and show that a theory featuring both endogenous fertility and endogenous coresidence can rationalise the observed cross-family fertility difference. Simulations from a calibrated dynamic general equilibrium version of the model show that the model has the right qualitative behaviour, and is quantitatively meaningful. Using individual data, we discuss (and dismiss) several potential alternative explanations. |
| Date: | 2024–05–06 |
| URL: | https://d.repec.org/n?u=RePEc:ctl:louvir:2024006&r= |
| By: | Wu, Keyu (University of Zurich); Fehr, Ernst (University of Zurich); Hofland, Sean (Lucerne School of Business); Schonger, Martin (Lucerne School of Business) |
| Abstract: | Ambiguous prospects are ubiquitous in social and economic life, but the psychological foundations of behavior under ambiguity are still not well understood. One of the most robust empirical regularities is the strong correlation between attitudes towards ambiguity and compound risk which suggests that compound risk aversion may provide a psychological foundation for ambiguity aversion. However, compound risk aversion and ambiguity aversion may also be independent psychological phenomena, but what would then explain their strong correlation? We tackle these questions by training a treatment group’s ability to reduce compound to simple risks, and analyzing how this affects their compound risk and ambiguity attitudes in comparison to a control group who is taught something unrelated to reducing compound risk. We find that aversion to compound risk disappears almost entirely in the treatment group, while the aversion towards both artificial and natural sources of ambiguity remain high and are basically unaffected by the teaching of how to reduce compound lotteries. Moreover, similar to previous studies, we observe a strong correlation between compound risk aversion and ambiguity aversion, but this correlation only exists in the control group while in the treatment group it is rather low and insignificant. These findings suggest that ambiguity attitudes are not a psychological relative, and derived from, attitudes towards compound risk, i.e., compound risk aversion and ambiguity aversion do not share the same psychological foundations. While compound risk aversion is primarily driven by a form of bounded rationality – the inability to reduce compound lotteries – ambiguity aversion is unrelated to this inability, suggesting that ambiguity aversion may be a genuine preference in its own right. |
| Keywords: | ambiguity aversion, compound risk aversion, bounded rationality, reduction of compound lotteries |
| JEL: | C91 D01 D91 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17032&r= |