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on Neuroeconomics |
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Issue of 2010‒12‒11
five papers chosen by |
| By: | John M. Gowdy (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA) |
| Abstract: | Human cultural adaptability helped our species get through several extreme environmental crises during the 200,000 year history of Homo sapiens. Richerson, Boyd and Henrich (2010) argue that this adaptability is a product of gene-culture coevolution. Much has been written about cultural evolution, but relatively little attention has been paid to the role human neurobiology plays in this process. I argue here that neuroscience can make important contributions to understanding human behavior within highly evolved social systems. This can help inform us as to how a transition to sustainability might be possible as we struggle to make it through the population, climate change, and resource bottlenecks of the 21st century. I argue further than the idea of homeostasis can serve as an organizing principle to understand individual, social and ecological sustainability.Creation-Date: 2010-11 |
| JEL: | A10 A11 P48 |
| URL: | http://d.repec.org/n?u=RePEc:rpi:rpiwpe:1009&r=neu |
| By: | Jan-Erik Lönnqvist (Faculty of Behavioural Sciences, University of Helsinki, Finland); Markku Verkasalo (Faculty of Behavioural Sciences, University of Helsinki, Finland); Gari Walkowitz (Department of Management, University of Cologne, Germany) |
| Abstract: | The authors investigated how the presence or absence of monetary incentives in a prisoner's dilemma game may influence research outcomes. Specifically, the predictive power of the Big Five personality traits on decisions in an incentivized (N = 60) or hypothetical (N = 60) prisoner's dilemma game was investigated. Participants were less generous in the incentivized game. More importantly, personality predicted decisions only in the incentivized game, with low Neuroticism and high Openness to Experience predicting more cooperative transfers. The influence of Neuroticism on behaviour in the incentivized game was mediated by risk attitude. The results are consistent with other results suggesting that the Big Five are relevant predictors of moral behaviour, and with results suggesting that the determinants of hypothetical decisions are different from the determinants of real decisions, with the latter being more revealing of one's true preferences. The authors argue that psychologists, contrary to prevailing praxis, should consider making their participants' decisions more real. This could allow psychologists to more convincingly generalize laboratory findings into contexts outside of the laboratory. |
| Keywords: | Big Five, Prisoner's dilemma, Social dilemma, Moral behaviour, Incentives, Stake size |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:01-05&r=neu |
| By: | Dessi, Roberta (Toulouse School of Economics (GREMAQ and IDEI) and CEPR); Zhao, Xiaojian (Hong Kong University) |
| Abstract: | The available evidence from numerous studies in psychology suggests that overconfidence is a much more important phenomenon in North America than in Japan. Relatedly, North Americans appear to view high self-esteem much more positively than Japanese. The pattern is reversed when it comes to shame, a social emotion which appears to play a much more important role among Japanese than North Americans. We develop an economic model that endogenizes these observed differences, and relates them to differences in economic opportunities. A crucial tradeoff arises in the model between the benefits of encouraging self-improvement and the benefits of promoting initiative and new investments. In this context, self-esteem maintenance (self-enhancement) and high sensitivity to shame emerge as substitute mechanisms to induce efficient effort and investment decisions, generating a "North American" equilibrium with overconfidence and low sensitivity to shame, and a "Japanese" equilibrium with high sensitivity to shame and no overconfidence. The analysis identifies the key equilibrium costs as well as the benefits of reliance on each mechanism, and the implications for welfare. |
| JEL: | D82 D83 Z13 |
| Date: | 2010–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:23207&r=neu |
| By: | Andreas Schick; Richard H. Steckel |
| Abstract: | Taller workers receive a substantial wage premium. Studies extending back to the middle of the last century attribute the premium to non-cognitive abilities, which are associated with stature and rewarded in the labor market. More recent research argues that cognitive abilities explain the stature-wage relationship. This paper reconciles the competing views by recognizing that net nutrition, a major determinant of adult height, is integral to our cognitive and non-cognitive development. Using data from Britain’s National Childhood Development Study (NCDS), we show that taller children have higher average cognitive and non-cognitive test scores, and that each aptitude accounts for a substantial and roughly equal portion of the stature premium. Together these abilities explain why taller people have higher wages. |
| JEL: | N3 J24 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16570&r=neu |
| By: | Vitezslav Babicky; Andreas Ortmann; Silvester Van Koten |
| Abstract: | Theories of fairness have typically used the assumption of ex-ante known pie size. Pie size, however, is rarely known ex ante. Using three simple allocation problems generally known as dictator, ultimatum and trust games, we explore the influence of ex-ante unknown pie size of varying degrees of risk on individual behavior. We derive theoretical predictions for two of these games using utility functions that capture additively separable constant relative risk aversion and inequity aversion. We test the theoretical predictions experimentally on two different subject pools: students of Czech Technical University and employees of Prague City Hall. We control for the risk attitude of our subjects through a variant of the Holt-Laury assessment instrument. We find statistically significant differences in giving behavior as a function of the degree of risk, and the degree of risk aversion, across individuals. We also find differences across the two subject pools but show that, once we control for various socio-demographic and cognitive characteristics, these differences evaporate. We discuss the policy and methodological implications of the results of our artefactual field experiment, as well as the implications for theories of fairness of reciprocity and their experimental test. |
| Keywords: | fairness, risk aversion, subject pool effects, economics experiments. |
| JEL: | C90 C91 C92 D81 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp419&r=neu |