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on Neuroeconomics |
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Issue of 2011‒12‒19
four papers chosen by |
| By: | Markus Mobius; Muriel Niederle; Paul Niehaus; Tanya S. Rosenblat |
| Abstract: | Evidence from social psychology suggests that agents process information about their own ability in a biased manner. This evidence has motivated exciting research in behavioral economics, but also garnered critics who point out that it is potentially consistent with standard Bayesian updating. We implement a direct experimental test. We study a large sample of 656 undergraduate students, tracking the evolution of their beliefs about their own relative performance on an IQ test as they receive noisy feedback from a known data-generating process. Our design lets us repeatedly measure the complete relevant belief distribution incentive-compatibly. We find that subjects (1) place approximately full weight on their priors, but (2) are asymmetric, over-weighting positive feedback relative to negative, and (3) conservative, updating too little in response to both positive and negative signals. These biases are substantially less pronounced in a placebo experiment where ego is not at stake. We also find that (4) a substantial portion of subjects are averse to receiving information about their ability, and that (5) less confident subjects are more likely to be averse. We unify these phenomena by showing that they all arise naturally in a simple model of optimally biased Bayesian information processing. |
| Keywords: | Human behavior ; Bayesian statistical decision theory |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:11-14&r=neu |
| By: | Andrew Dickerson; Gurleen Popli (Department of Economics, The University of Sheffield) |
| Abstract: | We use data from the four sweeps of the UK Millennium Cohort Study (MCS) of children born at the turn of the century to document the impact that poverty, and in particular persistent poverty, has on their cognitive development in their early years. We show that children born into poverty have significantly lower test scores at age 3, age 5 and age 7, and that continually living in poverty in their early years has a cumulative negative impact on their cognitive development. For children who are persistently in poverty throughout their early years, their cognitive development test scores at age 7 are more than 10 percentile ranks lower than children who have never experienced poverty, even after controlling for a wide range of background characteristics and parenting investment. |
| Keywords: | child poverty, cognitive development |
| JEL: | I32 J13 J62 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2011023&r=neu |
| By: | Ingo Outes-Leon; Catherine Porter; Alan Sanchez |
| Abstract: | This paper examines the causal link between early childhood nutrition and cognition, applying instrumental variables to sibling-differences for a sample of pre-school aged Peruvian children. Child-specific shocks in the form of food price changes and household shocks during the critical developmental period of a child are used as instruments. The analysis shows significant and positive returns to early childhood nutritional investments. An increase in the Height-for-Age z-score of one standard deviation—keeping other factors constant—translates into increases in the Peabody Picture Vocabulary Test (PPVT) score of 17-21 percent of a standard deviation. The period of analysis includes the recent global food price crisis that also affected Peru between 2006 and 2008. This therefore is also a quantification of the nutritional and subsequent cognitive costs of food prices on the sample, which could be magnified in later years. |
| JEL: | I12 I20 J13 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:4743&r=neu |
| By: | He, Yuqing |
| Abstract: | The paper explores utility measures by combining experiments with mathematical derivations in psychophysics paradigm. The analysis on ultimatum game experiment reveals an evidence for utility threshold and thus supports Bernoulli's utility logarithmic law. Both experimental results and theoretical derivations show that the logarithmic law is suitable for the description of commodity choice and the power law for risk choice. The further mathematical demonstration indicates the logarithmic law for utility scaling to be a Klein-Rubin utility function, a utility function well defined in microeconomics. Based on this, the experimental utility measure is connected with the econometric model Linear Expenditure System, and presents an experimental procedure for testing the utility maximization hypothesis, which will remove a long unsettled perplexity in a fundamental stone of economics since Gossen proposed it in 1854. -- |
| Keywords: | Psychophysics,ultimatum game,utility function,logarithmic law,power law |
| JEL: | A12 D01 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201150&r=neu |