New Economics Papers
on Neuroeconomics
Issue of 2012‒09‒30
four papers chosen by

  1. Self investments of adolescents and their cognitive development By Daniela Del Boca; Chiara Monfardini; Cheti Nicoletti
  2. Level-k reasoning and incentives By Larbi Alaoui; Antonio Penta
  3. The Relationship Between Economic Preferences and Psychological Personality Measures By Becker Anke; Deckers Thomas; Dohmen Thomas; Falk Armin; Kosse Fabian
  4. Healthy Habits: The Connection between Diet, Exercise, and Locus of Control By Cobb-Clark, Deborah A.; Kassenböhmer, Sonja C.; Schurer, Stefanie

  1. By: Daniela Del Boca; Chiara Monfardini; Cheti Nicoletti
    Abstract: While a large literature has focused on the impact of parental investments on child cognitive development, very little is known about the role of child?s own in- vestments. Information on how children invest their time separately from parents is probably little informative for babies and toddlers, but it becomes more and more important in later stages of life, such as adolescence, when children start to take decisions independently. By using the Child Development Supplement of the PSID (Panel Study of Income Dynamics), we model the production of cognitive ability of adolescents and extend the set of inputs to include the child?s own time investments. Looking at investments during adolescence, we ?nd that child?s investments matter more than mother?s investments. On the contrary, looking at investments during childhood, it is the mother?s investments that are more important. Our results are obtained accounting for potential unobserved child?s and family?s endowments and are robust across several speci?cations and samples, e.g. considering and not considering father?s investments and non-intact families.
    Keywords: time-use, cognitive ability, child development, adolescence.
    JEL: J13 D1
    Date: 2012
  2. By: Larbi Alaoui; Antonio Penta
    Abstract: Level-k theories are agnostic over whether individuals stop the iterated reasoning because of their own cognitive constraints, or because of their beliefs over the cognitive constraints of their opponents. In practice, individual level of play may be a function both of their own constraints and their beliefs over their opponents' reasoning process. Moreover, the rounds of introspection that players perform may depend on their incentives to think more deeply. We develop a theory which explicitly models players' reasoning procedure. The rounds of introspection that individuals perform and their actual level of play both follow endogenously. This model delivers testable implications as payoffs and opponents change, and it allows for comparisons across games. It also disentangles the cognitive bound of players for a given game from their beliefs about the play of their opponents. In conjunction with the framework, we present an experiment designed to test its predictions. We modify the Arad and Rubinstein (2012) `11-20' game to serve this precise purpose, and administer different treatments which vary beliefs over payoffs and opponents. The results of this experiment are consistent with the model, and appear to lend support to our theory. This experiment also confirms the central premise that individuals change their level of play as incentives to think more and beliefs over opponents vary.
    Keywords: beliefs, bounded rationality, cognitive cost , higher order beliefs, incentives, level-k reasoning, value of reasoning
    JEL: C72 C92 D80 D83
    Date: 2012–07
  3. By: Becker Anke; Deckers Thomas; Dohmen Thomas; Falk Armin; Kosse Fabian (METEOR)
    Abstract: Although both economists and psychologists seek to identify determinants of heterogeneity inbehavior, they use different concepts to capture them. In this review we first analyze theextent to which economic preferences and psychological concepts of personality - such as the BigFive and locus of control - are related. We analyze data from incentivized laboratory experimentsand representative samples and find only low degrees of association between economic preferencesand personality. We then regress life outcomes - such as labor market success, health status andlife satisfaction - simultaneously on preference and personality measures. The analysis revealsthat the two concepts are rather complementary when it comes to explaining heterogeneityin important life outcomes and behavior.
    Keywords: microeconomics ;
    Date: 2012
  4. By: Cobb-Clark, Deborah A. (University of Melbourne); Kassenböhmer, Sonja C. (Melbourne Institute of Applied Economic and Social Research); Schurer, Stefanie (Victoria University of Wellington)
    Abstract: This paper analyzes the relationship between individuals' locus of control and their decisions to exercise regularly, eat well, drink moderately, and avoid tobacco. Our primary goal is to assess the relative importance of the alternative pathways that potentially link locus of control to healthy habits. We find that individuals with an internal locus of control are more likely to eat well and exercise regularly. This link cannot be explained by the extent to which they are future-orientated and value their health, however. There are important gender differences in explaining the link between perceptions of control and healthy habits. Men with an internal locus of control expect to have higher health returns to their investments in diet and exercise. In contrast, women with an internal locus of control maintain healthy habits because they derive greater satisfaction from those activities than women with external control tendencies.
    Keywords: non-cognitive skills, locus of control, health behavior, health diet, exercise
    JEL: I14 J3 C18
    Date: 2012–08

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