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on Neuroeconomics |
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Issue of 2012‒01‒25
five papers chosen by |
| By: | Duffy, Sean; Smith, John |
| Abstract: | We find that differences in the ability to devote cognitive resources to a strategic interaction imply differences in strategic behavior. In our experiment, we manipulate the availability of cognitive resources by applying a differential cognitive load. In cognitive load experiments, subjects are directed to perform a task which occupies cognitive resources, in addition to making a choice in another domain. The greater the cognitive resources required for the task implies that fewer such resources will be available for deliberation on the choice. Although much is known about how subjects make decisions under a cognitive load, little is known about how this affects behavior in strategic games. We run an experiment in which subjects play a repeated multi-player prisoner's dilemma game under two cognitive load treatments. In one treatment, subjects are placed under a high cognitive load (given a 7 digit number to recall) and subjects in the other are placed under a low cognitive load (given a 2 digit number). We find that the behavior of the subjects in the low load condition converges to the Subgame Perfect Nash Equilibrium prediction at a faster rate than those in the high load treatment. However, we do not find the corresponding relationship involving outcomes in the game. Specifically, there is no evidence of a significantly different convergence of game outcomes across treatments. As an explanation of these two results, we find evidence that low load subjects are better able to condition their behavior on the outcomes of previous periods. |
| Keywords: | cognitive resources; experimental economics; experimental game theory; public goods game |
| JEL: | C72 C91 |
| Date: | 2012–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:35906&r=neu |
| By: | Jeffrey V. Butler (EIEF); Luigi Guiso (European University Institute and EIEF); Tullio Jappelli (University of Naples Federico II and CSEF) |
| Abstract: | Using a large sample of retail investors as well as experimental data we find that risk and ambiguity aversion are positively correlated. We show the common link is decision style: intuitive thinkers tolerate more risk and ambiguity than effortful reasoners. One interpretation is that intuitive thinking confers an advantage in risky or ambiguous situations. We present supporting lab and field evidence that intuitive thinkers outperform others in uncertain environments. Finally, we find that risk and ambiguity aversion vary with individual characteristics and wealth. The wealthy are less risk averse but more ambiguity averse, which has implications for financial puzzles. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1107&r=neu |
| By: | Toke Fosgaard (Institute of Food and Resource Economics, University of Copenhagen) |
| Abstract: | Pro-social behavior made when buying private goods is becoming increasingly popular. Several findings from behavioral and experimental economics however emphasizes that people are less pro-social in such situations, compared to pro-social decisions in non-market contexts. This paper suggests that emotional responses are important explanations of this finding. It is first argued that the emotional response to a pro-social decision combined with private good purchase is different from the response to a similar decision in a non-market situation. Through evidence from a laboratory experiment, it is then found, that deciding on a social choice in a market exchange involves a less positive emotional reaction to others, compared to non-market situations. Moreover, subjects in market contexts are found to be less responsive to other subjects’ contribution behavior, relative to the non-market contexts. |
| Keywords: | Emotions; market exchange; pro-social behavior |
| JEL: | C92 H41 M14 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:foi:wpaper:2012_1&r=neu |
| By: | Graziano , Mario; Schilirò, Daniele |
| Abstract: | The paper critically discusses the issue of rationality and choices in economics in both the behavioural and evolutionary approaches. Our study aims, on the one hand, to highlight the scientific contributions of psychology in economics, since psychology, and with it the theoretical approach of the behavioral economics, has made more complex and problematic the analysis of economic choices, showing the limits of rationality. On the other hand, the work offers a reinterpretation of the theory of Alfred Marshall in a biologicalevolutionary perspective. The reinterpretation of Marshall's theory in a evolutionary perspective aims to show that, historically, economics has not been a discipline aligned in a homogenous way to a single and undifferentiated thought, locked into the idea of perfect rationality, but, on the opposite, is a discipline that has enriched itself and continually is enriching by contributions and significant contaminations with other research fields. |
| Keywords: | rationality; choices; behavioral economics; evolutionary theories; biology; |
| JEL: | D03 D81 B52 D90 B13 D01 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:35971&r=neu |
| By: | Kosse, Fabian (University of Bonn); Pfeiffer, Friedhelm (ZEW Mannheim) |
| Abstract: | Using experimental data of children and their mothers, this paper explores the intergenerational relationship of impatience. The child's impatience stems from a delay of gratification experiment. Mother's impatience has been assessed by a choice task where the mothers faced trade-offs between a smaller-sooner and a larger-later monetary reward with a delay of six or twelve months. The findings demonstrate an intergenerational relationship in short-run decision making. Controlling for mother's and child's characteristics the child's impatience at preschool age is significantly correlated with the six month maternal reservation interest rate. |
| Keywords: | time preferences, impatience, intergenerational transmission, field experiments |
| JEL: | C93 D03 D90 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6247&r=neu |