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on Neuroeconomics |
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Issue of 2009‒05‒02
ten papers chosen by |
| By: | Roe, Brian E.; Haab, Timothy C. |
| Abstract: | Advances in biomedical technology have irrevocably jarred open the black box of human decision making, offering social scientists the potential to validate, reject, refine and redefine the individual models of resource allocation that form the foundation of modern economics. In this paper we (1) provide a comprehensive overview of the biomedical methods that may be harnessed by economists and other social scientists to better understand the economic decision making process; (2) review research that utilizes these biomedical methods to illuminate fundamental aspects of the decision making process; and (3) summarize evidence from this literature concerning the basic tenants of neoclassical utility that are often invoked for positive welfare analysis of environmental policies. We conclude by raising questions about the future path of policy related research and the role biomedical technologies will play in defining that path. |
| Keywords: | neuroeconomics, neuroscience, brain imaging, genetics, welfare economics, utility theory, biology, decision making, preferences, Institutional and Behavioral Economics, Research Methods/ Statistical Methods, D01, D03, D6, D87, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea09:49151&r=neu |
| By: | Martin Jones (University of Dundee) |
| Abstract: | Keynes's theory of probability has been studied intensively in the past few years with much discussion of its relevance to modern economics. This paper examines Keynes's ideas in light of criticisms made by other authors and comes to the conclusion that Keynes's views on rationality are critically flawed. However, it is asserted that this actually allows more freedom for investigation when it is combined with insights from behavioural economics and gives examples where this could be fruitful. One of the side-effects of this is that there is a narrowing of the gap between Keynesian and mainstream behavioural views on decision-making. |
| Keywords: | uncertainty, Keynes, behavioral economics |
| JEL: | B41 |
| URL: | http://d.repec.org/n?u=RePEc:sti:wpaper:031/2009&r=neu |
| By: | Wenshu Gao; Russell Smyth |
| Abstract: | We estimate the returns to height using data from 12 Chinese cities. We present both ordinary least squares (OLS) and two-stage least squares (TSLS) estimates. In the latter height is instrumented using proxies for health human capital accumulated in childhood and adolescence, which influence adult height. The OLS estimates suggest that an additional centimetre of adult height is associated with wages being 1.1 per cent higher for males and 0.9 per cent higher for females. The TSLS estimates suggest each additional centimetre of adult height is associated with wages being 4.8 per cent higher for males and 10.8 per cent for females. The difference reflects the fact that the OLS estimates are predominantly determined by the random genetic factors influencing height, while the TSLS estimates also take into account returns from investment in health human capital during childhood and adolescence. These results imply considerable returns to investment in health human capital. |
| Keywords: | China, health, height, wages |
| JEL: | I10 J15 J31 J71 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2009-05&r=neu |
| By: | Nina Horstmann (Max Planck Institute for Research on Collective Goods); Andrea Ahlgrimm (Max Planck Institute for Research on Collective Goods); Andreas Glöckner (Max Planck Institute for Research on Collective Goods) |
| Abstract: | In recent years, numerous studies comparing intuition and deliberation have been published. However, until now relatively little is known about the cognitive processes underlying the two decision modes. Therefore, we analyzed processes of information search and integration using eye-tracking technology. We tested hypotheses derived from dual-process models which postulate that intuition and deliberation are completely distinct processes against predictions of interventionist models. The latter assume that intuitive and deliberate decisions are based on the same basic process which is supplemented by additional processes in the deliberate decision mode. We manipulated decision mode between-participants by means of instructions and participants completed simple and complex city-size tasks as well as complex legal inference tasks. Our findings indicate that the instruction to deliberate does not necessarily increase levels of processing. We found no difference in mean fixation duration and the distribution of short, medium and long fixations. Instruction-induced deliberation led to a higher number of fixations, a more complete information search and more repeated information investigations. Overall, the data support interventionist models suggesting that decisions mainly rely on automatic processes which are supplemented by additional operations in the deliberate decision mode. |
| Keywords: | Decision Making, Decision Mode, Intuition, Deliberation, Eye-Tracking |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_10&r=neu |
| By: | Bramsen, Jens-Martin |
| Abstract: | A classic argument in economics is that experience in the market place will eliminate mistakes and cognitive biases. Internet auctions are a popular market were some bidders gather extensive experience. In a unique data set from a Scandinavian auction site I question if and what bidders learn. At face value experienced bidders do adapt better bidding strategies. However, the so-called pseudo-endowment effect does not disappear. Regardless of their experience, bidders will be inclined to increase their willingness to pay as a response to having had “ownership” (the leading bid) before being outbid. Thus, this data can confirm that feedback, and especially negative feedback, seems to be a critical component in learning. |
| Keywords: | Experience; Learning; Internet auctions; Reference-Dependent Preferences; Endowment Effect; Bidding behavior; eBay. |
| JEL: | D12 D44 D83 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:14815&r=neu |
| By: | Anderson, Simon P; de Palma, André |
| Abstract: | Limited consumer attention limits product market competition: prices are stochastically lower the more attention is paid. Ads compete to be the lowest price with other ads from the same sector and they compete for attention with ads from other sectors: equilibrium sector ad shares under free entry follow a CES form. When a sector gets more attractive, its advertising expands: others lose ad market share but may increase in absolute terms if sufficiently attractive. The "information hump" shows highest ad levels for intermediate attention levels when there is a decent enough chance of getting the message across and also of not being undercut by a cheaper offer. The Information Age takes off when the number of sectors grows, but total ad volume reaches an upper limit. Overall, advertising is excessive, though the allocation across sectors is optimal. Nonetheless, both large sectors and small ones can be blamed for misallocation of ads in using up scarce attention. |
| Keywords: | advertising distribution; consumer attention; economics of attention; information age; information filtering; price dispersion; size distribution of firms |
| JEL: | D11 D60 I0 L13 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7286&r=neu |
| By: | Delphine Van Hoorebeke |
| Abstract: | The impact of social processes in working groups becomes a great managerial interest, being given the organizational tendency to direct itself towards team work. To support the performance of group, research in management carried a particular accent on the cognitive aspect of the interpersonal relationships, exploring the way and the cognitive processes of share of ideas and memories. In this domain, the emotional aspect remains under considered. The diffusion of the emotions in a group is, however, an intrinsic characteristic with the existence of a group (Sandelands and Clear St, 1993, p. 445). If the results of an experimental study on 223 managers indicate that the cohesion of group has an influence on the performance of the team, the emotional contagion, as an independent variable, explains it more and in a way much more significant. <P>Comprendre l’impact des processus sociaux dans les groupes de travail devient un intérêt managérial primordial, étant donné la tendance organisationnelle à s’orienter davantage vers le travail en équipe. Pour favoriser la performance de groupe, la recherche en management a porté un accent particulier sur l’aspect cognitif des relations interpersonnelles, explorant la façon et les processus cognitifs de partage des idées, mémoires et construits. L’aspect affectif y demeure inconsidéré. La diffusion des émotions dans un groupe est, pourtant, une caractéristique intrinsèque à l’existence d’un groupe (Sandelands et St Clair, 1993, p. 445). Si les résultats d'une étude expérimentale sur 223 cadres indiquent que la cohésion de groupe a une influence sur la performance de l’équipe, la contagion émotionnelle, en tant que variable indépendante, l’explique davantage et de façon bien plus significative. |
| Keywords: | team working performance, emotional contagion, experimentation, performance d'équipe, contagion émotionnelle, expérimentation |
| Date: | 2009–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2009s-16&r=neu |
| By: | Luc Arrondel |
| Abstract: | Research using French data has often found that parents' saving behaviour influences that of their children. This article attempts to explain this phenomenon using data from a unique French survey set up by Delta and TNS-Sofres in 2002. This survey contains information on both preference and saving information for two generations of respondents.Savings preferences of parents and children, concerning risk attitudes and time discounting, are significantly correlated. The correlation coefficient is 0.25, so that the concordance, while significant, is not complete. The analogous correlation between wealth levels is 0.22. This coefficient is corrected for the differences in age of the two generations, and concerns coexisting generations, i.e. before the most significant intergenerational transfers have taken place. Over 40% of this elasticity results (directly or indirectly) from the levels of permanent income of the two generations. Education and preferences further explain around 20% each, and intergenerational transfers that have already taken place around 13%. The contribution of savers' preferences is also around 13%, we control for the effect of permanent income. Even though it is only one of a number of channels of influence, the transmission of preferences therefore plays a non- negligible role in the transmission of wealth inequalities. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2009-12&r=neu |
| By: | Colin Jennings (Department of Economics, University of Strathclyde) |
| Abstract: | This paper attempts to extend existing models of political agency to an environment in which voting may be divided between informed and instrumental, informed and ‘expressive’ (Brennan and Lomasky (1993)) and uninformed due to ‘rational irrationality’ (Caplan (2007)). It constructs a model where politicians may be good, bad or populist. Populists are more willing than good politicians to pander to voters who may choose inferior policies in a large-group electoral setting because their vote is insignificant compared with those that voters would choose were their vote decisive in determining the electoral outcome. Bad politicians would ideally like to extract tax revenue for their own ends. Initially we assume the existence of only good and populist politicians. The paper investigates the incentives for good politicians to pool with or separate from populists and focuses on three key issues – (1) how far the majority of voter’s preferences are from those held by the better informed incumbent politician (2) the extent to which the population exhibits rational irrationality and expressiveness (jointly labelled as emotional) and (3) the cost involved in persuading uninformed voters to change their views in terms of composing messages and spreading them. This paper goes on to consider how the inclusion of bad politicians may affect the behaviour of good politicians and suggests that a small amount of potential corruption may be socially useful. It is also argued that where bad politicians have an incentive to mimic the behaviour of good and populist politicians, the latter types of politician may have an incentive to separate from bad politicians by investing in costly public education signals. The paper also discusses the implications of the model for whether fiscal restraints should be soft or hard. |
| Keywords: | Political Agency, Expressive Voting, Rational Irrationality, Democratic Inefficiency, Populism |
| JEL: | D72 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:0909&r=neu |
| By: | Leech, Dennis (Department of Economics, University of Warwick); Leech, Robert (Division of Neuroscience and Mental Health, Imperial College London); Simmonds, Anna (MRC Clinical Sciences Center, Imperial College London) |
| Abstract: | An increasing trend in functional MRI experiments involves discriminating between experimental conditions on the basis of fine-grained spatial patterns extending across many voxels. Typically, these approaches have used randomized resampling to derive inferences. Here, we introduce an analytical method for drawing inferences from multivoxel patterns. This approach extends the general linear model to the multivoxel case resulting in a variant of the Mahalanobis distance statistic which can be evaluated on the !2 distribution. We apply this parametric inference to a single-subject fMRI dataset and consider how the approach is both computationally more efficient and more sensitive than resampling inference. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:899&r=neu |