New Economics Papers
on Neuroeconomics
Issue of 2010‒11‒20
six papers chosen by

  1. Revealed Preferences for Risk and Ambiguity By Donald J. Brown; Chandra Erdman; Kirsten Ling; Laurie Santos
  2. Do I really want to know? A cognitive dissonance-based explanation of other-regarding behavior By Astrid Matthey; Tobias Regner
  3. The message framing of health communications : how to elicit higher intention to get an annual pap test ? By L. Balbo
  4. Inconsistency Pays?: Time-inconsistent subjects and EU violators earn more By Berg, Nathan; Eckel, Catherine; Johnson, Cathleen
  5. Punishment and cooperation: the "old" theory By Ortona, Guido
  6. The Relevance of Evolutionary Science For Economic Theory and Policy By John M. Gowdy; David Sloan Wilson

  1. By: Donald J. Brown (Department of Economics, Yale University); Chandra Erdman (U.S. Bureau of the Census); Kirsten Ling (Office of the Controller of the Currency); Laurie Santos (Department of Psychology, Yale University)
    Abstract: We replicate the essentials of the Huettel et al. (2006) experiment on choice under uncertainty with 30 Yale undergraduates, where subjects make 200 pair-wise choices between risky and ambiguous lotteries. Inferences about the independence of economic preferences for risk and ambiguity are derived from estimation of a mixed logit model, where the choice probabilities are functions of two random effects: the proxies for risk-aversion and ambiguity-aversion. Our principal empirical finding is that we cannot reject the null hypothesis that risk and ambiguity are independent in economic choice under uncertainty. This finding is consistent with the hypothesized independence of the neural mechanisms governing economic choices under risk and ambiguity, suggested by the double dissociation-fMRI study reported in Huettel et al.
    Keywords: Mixed logit, Risk-aversion, Ambiguity-aversion
    JEL: C14 C25 C91 D81
    Date: 2010–11
  2. By: Astrid Matthey (Max Planck Institute of Economics, Jena, Germany); Tobias Regner (Max Planck Institute of Economics, Jena, Germany)
    Abstract: We investigate to what extent genuine social preferences can explain observed other-regarding behavior. In a dictator game variant subjects can choose whether to learn about the consequences of their choice for the receiver. We find that a majority of subjects showing other-regarding behavior when the payoffs of the receiver are known, choose to ignore these consequences if possible. This behavior is inconsistent with preferences about outcomes. Other-regarding behavior may also be explained by avoiding cognitive dissonance as in Konow (2000). Our experiment's choice data is in line with this approach. In addition, we successfully relate individual behavior to proxies for cognitive dissonance.
    Keywords: social preferences, other-regarding behavior, experiments, social dilemma, cognitive dissonance
    JEL: C72 D01 C91 D80
    Date: 2010–11–11
  3. By: L. Balbo (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II)
    Abstract: In an online experiment, women (N=209) were randomly exposed to a pamphlet promoting Pap test. The pamphlet was either gain- or loss-framed and emphasized either the prevention or detection function of the Pap. We hypothesized that the fit between framing and function (i.e. gain-prevention and loss-detection) will result in higher intention to follow the recommendation. Moreover, we predicted that under the non-fit condition (i.e. gain-detection and loss-prevention); people higher in perceived vulnerability will have higher intention to follow the recommendation. Analyses revealed that our hypotheses were partially supported
    Keywords: Marketing of health, health communication, message framing
    Date: 2010
  4. By: Berg, Nathan; Eckel, Catherine; Johnson, Cathleen
    Abstract: Experimental choice data from 881 subjects based on 40 time-tradeoff items and 32 risky choice items reveal that most subjects are time-inconsistent and most violate the axioms of expected utility theory. These inconsistencies cannot be explained by well-known theories of behavioral inconsistency, such as hyperbolic discounting and cumulative prospect theory. Aggregating expected payoffs and the risk associated with each subjects’ 72 choice items, the statistical links between inconsistency and total payoffs are reported. Time-inconsistent subjects and those who violate expected utility theory both earn substantially higher expected payoffs, and these positive associations survive largely undiminished when included together in total payoff regressions. Consistent subjects earn lower than average payoffs because most of them are consistently impatient or consistently risk averse. Positive payoffs from inconsistency cannot, however, be fully explained by greater risk taking. Controlling for the total risk of each subject’s risk choices as well as for socio-economic differences among subjects, time inconsistent subjects earn significantly more money, in statistical and economic terms. So do expected utility violators. Positive returns to inconsistency extend outside the domain in which inconsistencies occurs, with time-inconsistent subjects earning more on risky choice items, and expected utility violators earning more on time-tradeoff items. The results seem to call into question whether axioms of internal consistency—and violations of these axioms that behavioral economists frequently focus on—are economically relevant criteria for evaluating the quality of decision making in human populations.
    Keywords: behavioral economics; hyperbolic discounting; hypobolic; normative; coherence; correspondence; consistency; irrationality; rationality
    Date: 2010
  5. By: Ortona, Guido
    Abstract: The so-called problem of the spontaneous cooperation has been substantially resolved through a mix of biology and economics. All the elements of the solution had been discovered by 1980s, yet they went somehow unnoticed. This "old" solution is the subject of this review. Its most relevant feature was the discovery that the adoption of punishment as an equilibrium-enforcing device makes a cooperative solution in a repeated prisoner's dilemma possible. This opened the way to a biological (or anthropological) explanation otherwise logically inconsistent.
    Keywords: norms, cooperation, punishment
    JEL: A12
    Date: 2010–11
  6. By: John M. Gowdy (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA); David Sloan Wilson (Department of Economics, Binghamton University, Binghamton, NY 13903)
    Abstract: NSF’s “Dear Colleague Letter” reflects the widely perceived need to go beyond current economic theory in the formulation of public policy. At the same time, there is a profound lack of unity among the disciplines that comprise the behavioral, social, and economic sciences. This white paper emphasizes the relevance of evolutionary science as a way to integrate the SBE sciences, similar to the integration that is more advanced in the biological sciences. Modern evolutionary science is broadly construed to include cultural in addition to biological evolution and the study of neural and psychological mechanisms (proximate causation) in addition to the environmental factors that brought the mechanisms into existence and result in the expression of specific behaviors (ultimate causation). It provides an exceptionally useful set of theoretical and empirical tools for integrating the many disciplines in the biological and SBE sciences required to formulate economic theory and public policy for the 21st century. The task of integration is already in progress and can be applied to the formulation of public policy without a long academic time lag. We therefore call for integration across disciplines and evolutionary science as an integrative framework to be recognized as a funding priority by NSF.
    JEL: A10 A11 P48
    Date: 2010–11

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