New Economics Papers
on Neuroeconomics
Issue of 2014‒02‒15
four papers chosen by

  1. Personality and field of study choice By Humburg M.
  2. Sunk costs of consumer search: economic rationality of satisficing decision By Malakhov, Sergey
  3. A note on empathy in games By Grohn, Jan; Huck, Steffen; Valasek, Justin Mattias
  4. Is There Room for 'Fear' as a Human Passion in the Work by Adam Smith? By Daniela Parisi

  1. By: Humburg M. (GSBE)
    Abstract: Field of study choice has far-reaching implications for individuals enrolling in university. Field of study choice is strongly linked to the subject matter graduates will specialize in, the kind of work environment they will be working in, and the returns to their skills they can expect once they enter the workforce. This paper uses unique Dutch data which demonstrates that personality measured at age 14 can be linked to field of study choice at around age 19. It can be shown that the Big Five personality traits affect field of study choice. Moreover, while personality matters less than cognitive skills, such as math ability and verbal ability, for educational attainment, the influence of personality on field of study choice is comparable to that of cognitive skills. Sorting across fields of study on the basis of personality traits is in some respects similar for women and men, although substantial differences exist.
    Keywords: Analysis of Education; Human Capital; Skills; Occupational Choice; Labor Productivity;
    JEL: I21 J24
    Date: 2014
  2. By: Malakhov, Sergey
    Abstract: The paper argues that sunk costs’ sensitivity can lead to the optimal consumption-leisure choice under price dispersion. The increase in quantity to be purchased with the extension of the time horizon of the consumption-leisure choice equalizes marginal costs of search with its marginal benefits. The implicit optimal choice results in the explicit satisficing decision. The transformation of cognitive mechanism of discouragement into satisficing happens only in the “common model” of consumer behavior. The paper argues that the cognitive mechanism of aspiration takes place when consumers try to get marginal savings on purchase greater than the wage rate and, therefore, they follow the “leisure model” of behavior where both the marginal utility of labor income and the marginal utility of consumption become negative.
    Keywords: sunk costs, consumption-leisure choice, search, satisficing, maximizing
    JEL: D11 D83
    Date: 2014–02
  3. By: Grohn, Jan; Huck, Steffen; Valasek, Justin Mattias
    Abstract: In this note we shall discuss a concept that - despite its prominence in both Hume (1739) and Smith (1759), its obvious relevance for social behavior, and its not so infrequent use in colloquial language - has never gained a foothold in economic theory: the concept of empathy. Specifically, we illustrate how some insights from the psychological literature on empathy can be incorporated into a standard utility framework, and demonstrate the potential interaction of beliefs and utility through the channel of empathy. -- In diesem Artikel diskutieren wir das Konzept der Empathie. Dieses konnte in der ökonomischen Theorie nie wirklich Fuß fassen, trotz seiner Bedeutung sowohl bei Hume (1739) als auch Smith (1759), seiner offensichtlichen Relevanz für soziales Verhalten und seines durchaus verbreiteten Gebrauchs in der Umgangssprache. Insbesondere zeigen wir, wie einige Erkenntnisse aus der psychologischen Literatur über Empathie in ein Standardkonzept von 'Nutzen' integriert werden können und demonstrieren die potenzielle Interaktion von Erwartungen und Nutzen über den Weg der Empathie.
    Keywords: Empathy,Belief Formation,Preferences
    JEL: D03 D83
    Date: 2014
  4. By: Daniela Parisi (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: The sciences tell us that fears are physical feelings and mental emotions that play a key role in any society. Not many issues related to fear are explored by economists today. The aim of this paper is to go backwards through the history of economic thought, and examine if and how Adam Smith considered fear in his work: in effect, he devoted a great deal of attention to the concept of fear. This paper does not intend to cover the whole of the topic at hand as it would also be useful to investigate the connections between fear and all the other feelings that pervade Smith's thought.
    Keywords: Adam Smith, Human Passions, Fear, Sociology, Psychology, Neurosciences
    JEL: B12
    Date: 2014–01

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