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on Neuroeconomics |
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Issue of 2013‒02‒16
four papers chosen by |
| By: | David Gill; Victoria Prowse |
| Abstract: | In this paper we investigate how cognitive ability influences behavior, success and theevolution of play towards Nash equilibrium in repeated strategic interactions. We study behaviorin a p-beauty contest experiment and find striking differences according to cognitiveability: more cognitively able subjects choose numbers closer to equilibrium, converge morefrequently to equilibrium play and earn more even as behavior approaches the equilibriumprediction. To understand better how subjects with different cognitive abilities learn differently,we estimate a structural model of learning based on level-k reasoning. We find asystematic positive relationship between cognitive ability and levels; furthermore, the averagelevel of more cognitively able subjects responds positively to the cognitive ability of theiropponents, while the average level of less cognitively able subjects does not respond at all.Our results suggest that, in strategic environments, higher cognitive ability translates intobetter analytic reasoning and a better ‘theory of mind’. |
| Keywords: | Cognitive ability, bounded rationality, level-k, convergence, learning non-equilibrium behavior, beauty contest, repeated games, structural modeling, theory of mind, intelligence, Raven test |
| JEL: | C92 C73 D83 |
| Date: | 2013–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:641&r=neu |
| By: | Borghans, Lex (Maastricht University); Meijers, Huub (Maastricht University); ter Weel, Bas (CPB Netherlands Bureau for Economic Policy Analysis) |
| Abstract: | This research provides an economic model of the way people behave during an IQ test. We distinguish a technology that describes how time investment improves performance from preferences that determine how much time people invest in each question. We disentangle these two elements empirically using data from a laboratory experiment. The main findings is that both intrinsic (questions that people like to work on) and extrinsic motivation (incentive payments) increase time investments and as a result performance. The presence of incentive payments seems to be more important than the size of the reward. Intrinsic and extrinsic motivation turn out to be complements. |
| Keywords: | cognitive test scores, incentives |
| JEL: | J20 J24 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7182&r=neu |
| By: | Giovanna Devetag; Sibilla Di Guida; Luca Polonio |
| Abstract: | We analyze subjects’ eye movements while they make decisions in a series of one-shot games. The majority of them perform a partial and selective analysis of the payoff matrix, often ignoring the payoffs of the opponent and/or paying attention only to specific cells. Our results suggest that subjects apply boundedly rational decision heuristics that involve best responding to a simplification of the decision problem, obtained either by ignoring the other players’ motivations or by considering them only for a subset of outcomes. Finally, we find a correlation between types of eye movements observed and choices in the games. |
| Keywords: | one-shot games, eye-tracking, similarity, categorization, focal points, individual behavior, experimental economics, behavioral economics |
| JEL: | C72 C91 D01 D83 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:1301&r=neu |
| By: | Golsteyn, Bart H.H. (Maastricht University); Grönqvist, Hans (SOFI, Stockholm University); Lindahl, Lena (SOFI, Stockholm University) |
| Abstract: | This paper investigates the relationship between time preferences and lifetime social and economic behavior. We use a Swedish longitudinal dataset that links information from a large survey on children's time preferences at age 13 to administrative registers spanning over five decades. Our results indicate a substantial adverse relationship between high discount rates and school performance, health, labor supply, and lifetime income. Males and high ability children gain significantly more from being future-oriented. These discrepancies are largest regarding outcomes later in life. We also show that the relationship between time preferences and long-run outcomes operates through early human capital investments. |
| Keywords: | intertemporal choice, personality, preference parameter, human capital, income, health |
| JEL: | D03 D91 J01 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7165&r=neu |