nep-neu New Economics Papers
on Neuroeconomics
Issue of 2010‒03‒06
five papers chosen by
Daniel Houser
George Mason University

  1. Framing-Based Choice: A Model of Decision-Making Under Risk By Kobi Kriesler; Shmuel Nitzan
  2. Handedness, Health and Cognitive Development: Evidence from Children in the NLSY By Johnston, David W.; Nicholls, Michael E. R.; Shah, Manisha; Shields, Michael A.
  3. Does Retirement Affect Cognitive Functioning? By Bonsang Eric; Adam Stéphane; Perelman Sergio
  4. Is It Real, or Is It Randomized?: A Financial Turing Test By Jasmina Hasanhodzic; Andrew W. Lo; Emanuele Viola
  5. No Country for Fat Men? Obesity, Earnings, Skills, and Health among 450,000 Swedish Men By Lundborg, Petter; Nystedt, Paul; Rooth, Dan-Olof

  1. By: Kobi Kriesler; Shmuel Nitzan (Department of Economics, Bar Ilan University)
    Abstract: In this study we propose an axiomatic theory of decision-making under risk that is based on a new approach to the modeling of framing that focuses on the subjective statistical dependence between prizes of compared lotteries. Unlike existing models that allow objective statistical dependence, as in Regret Theory, in our model the emphasis is on alternative subjective statistical dependence patterns that are induced by alternative descriptions of the lotteries, i.e., by alternative framing. A distinct advantage of the proposed general descriptive model of choice is its ability to adequately explain a wide variety of behaviors and, in particular, several well-known paradoxes of different types.
    Keywords: framing, statistical dependence, non-expected utility, expected value of lottery interchange
    JEL: D81
    Date: 2009–06
  2. By: Johnston, David W. (Queensland University of Technology); Nicholls, Michael E. R. (Melbourne Institute of Applied Economic and Social Research); Shah, Manisha (University of California, Irvine); Shields, Michael A. (University of Melbourne)
    Abstract: Using data from the US National Longitudinal Survey of Youth, and fitting family fixed-effects models of child health and cognitive development, we test if left-handed children do significantly worse than their right-handed counterparts. The health measures cover both physical and mental health, and the cognitive development test scores span (1) Memory, (2) Vocabulary, (3) Mathematics, (4) Reading and (5) Comprehension. We find that while left-handed children have a significantly higher probability of suffering an injury needing medical attention, there is no difference in their experience of illness or poor mental health. We also find that left-handed children have significantly lower cognitive development test scores than right-handed children for all areas of development with the exception of reading. Moreover, the left-handedness disadvantage is larger for boys than girls, and remains roughly constant as children grow older for most outcomes. We also find that the probability of a child being left-handed is not related to the socioeconomic characteristics of the family, such as income or maternal education. All these results tend to support a difference in brain functioning or neurological explanation for handedness differentials rather than one based on left-handed children living in a right-handed world.
    Keywords: handedness, children, health, cognitive development, family fixed-effects
    JEL: I12 J10
    Date: 2010–02
  3. By: Bonsang Eric; Adam Stéphane; Perelman Sergio (ROA rm)
    Abstract: This paper analyzes the effect of retirement on cognitive functioning using two large scale surveys. On the one hand the HRS, a longitudinal survey among individuals aged 50+ living in the United States, allows us to control for individual heterogeneity and endogeneity of the retirement decision by using the eligibility age for Social Security as an instrument. On the other hand, a comparable international European survey, SHARE, allows us to identify the causal effect of retirement on cognitive functioning by using the cross-country differences in the age-pattern of retirement. The results highlight in both cases a significant negative, and quantitatively comparable, effect of retirement on cognitive functioning. Our results suggest that promoting labor force participation of older workers is not only desirable to insure the viability of retirement schemes, but it could also delay cognitive decline, and thus the occurrence of associated impairments at older age.
    Keywords: education, training and the labour market;
    Date: 2010
  4. By: Jasmina Hasanhodzic; Andrew W. Lo; Emanuele Viola
    Abstract: We construct a financial "Turing test" to determine whether human subjects can differentiate between actual vs. randomized financial returns. The experiment consists of an online video-game ( where players are challenged to distinguish actual financial market returns from random temporal permutations of those returns. We find overwhelming statistical evidence (p-values no greater than 0.5%) that subjects can consistently distinguish between the two types of time series, thereby refuting the widespread belief that financial markets "look random." A key feature of the experiment is that subjects are given immediate feedback regarding the validity of their choices, allowing them to learn and adapt. We suggest that such novel interfaces can harness human capabilities to process and extract information from financial data in ways that computers cannot.
    Date: 2010–02
  5. By: Lundborg, Petter (Lund University); Nystedt, Paul (Linköping University); Rooth, Dan-Olof (Linneaus University)
    Abstract: The negative association between obesity and labor market outcomes has been widely documented, yet little is known about the mechanisms through which the association arises. Using rich and unique data on 450,000 Swedish men enlisting for the military, we find that the crude obesity penalty in earnings, which amounts to about 18 percent, is linked to supply-side characteristics that are associated with both earnings and obesity. In particular, we show that the penalty reflects negative associations between obesity, on the one hand, and cognitive skills, non-cognitive skills, and physical fitness, on the other. Our results suggest that employers use obesity as a marker for skill limitations in order to statistically discriminate.
    Keywords: obesity, overweight, earnings, cognitive ability, non-cognitive ability, health, physical fitness
    JEL: I10 J10 J70
    Date: 2010–02

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