New Economics Papers
on Neuroeconomics
Issue of 2007‒06‒11
three papers chosen by
Daniela Raeva

  1. Resistance to change. Exploring the convergence of institutions, organizations and the mind toward a common phenomenon By Patalano, Roberta
  2. Herding And Social Pressure In Trading Tasks: A Behavioural Analysis By Baddeley, M.; Pillas, D.; Christopoulos, Y.; Schultz, W.; Tobler, P.
  3. If Winning isn't Everything, why do they keep Score? A Structural Empirical Analysis of Dutch Flower Auctions By Gerard J. van den Berg; Bas van der Klaauw

  1. By: Patalano, Roberta
    Abstract: Resistance to change is not a new concept in economic literature (Coch and French 1948, Boulding 1956). However, in the last few decades it has acquired specific connotations and meanings that deserve attention. The first aim of the paper is to analyze how the concept has evolved since its introduction by Lewin (1946) and how it has diversified. Having acknowledged that resistance characterizes institutions, organizations and the mind, we suggest that the convergence toward such phenomenon is not surprising. Indeed, it may be explained by taking the bounds that affect the cognitive and emotional counterparts of economic behavior into account. We finally reinterpret resistance to change as a heuristic that helps manage the natural tendency of human beings to fear, uncertainty and its expected effects.
    Keywords: Change - cognitive economics - heuristic - emotions - resistance
    JEL: B59 D83 D81
    Date: 2007–05
  2. By: Baddeley, M.; Pillas, D.; Christopoulos, Y.; Schultz, W.; Tobler, P.
    Abstract: We extend the experimental literature on Bayesian herding using evidence from a financial decision-making experiment. We identify significant propensities to herd increasing with the degree of herd-consensus. We test various herding models to capture the differential impacts of Bayesian-style thinking versus behavioural factors. We find statistically significant associations between herding and individual characteristics such as age and personality traits. Overall, our evidence is consistent with explanations of herding as the outcome of social and behavioural factors. Suggestions for further research are outlined and include verifying these findings and identifying the neurological correlates of propensities to herd.
    Keywords: Herding, Bayesian updating, social learning, social pressure
    JEL: D7 D8 D81 D82 D83
    Date: 2007–05
  3. By: Gerard J. van den Berg (Vrije Universiteit Amsterdam); Bas van der Klaauw (Vrije Universiteit Amsterdam)
    Abstract: This paper provides a structural empirical analysis of Dutch auctions of houseplants at the flower auction in Aalsmeer, the Netherlands. The data set is unique for Dutch auctions in the sense that it includes observations of all losing bids in an interval adjacent to the winning bid. The size of this interval is determined by the speed of reaction of the auction participants, and as such these data are collectible due to neurological constraints on information processing. The data on losing bids are shown to be informative on the structural model determinants. The models are estimated using the Gibbs sampler with data augmentation. We take account of data limitations concerning the number of bidders. The estimation results are used to investigate whether actual reserve prices are optimal, and to determine the effects of reserve price changes.
    Keywords: first-price auction; private value; speed of reaction; observing losing bids; data augmentation; Gibbs sampling; Markov Chain Monte Carlo; reserve price
    JEL: C11 D44
    Date: 2007–05–30

This issue is ©2007 by Daniela Raeva. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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