|
on Neuroeconomics |
|
Issue of 2014‒06‒14
five papers chosen by |
| By: | Gill, David (University of Oxford); Prowse, Victoria L. (Cornell University) |
| Abstract: | In this paper we investigate how cognitive ability and character skills influence behavior, success and the evolution of play towards Nash equilibrium in repeated strategic interactions. We study behavior in a p-beauty contest experiment and find striking differences according to cognitive ability: more cognitively able subjects choose numbers closer to equilibrium, converge more frequently to equilibrium play and earn more even as behavior approaches the equilibrium prediction. 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 a systematic positive relationship between cognitive ability and levels; furthermore, the average level of more cognitively able subjects responds positively to the cognitive ability of their opponents, while the average level of less cognitively able subjects does not respond. Finally, we compare the influence of cognitive ability to that of character skills, and find that both cognition and personality affect behavior and learning. More agreeable and emotionally stable subjects perform better and learn faster, although the effect of cognitive ability on behavior is stronger than that of character skills. |
| Keywords: | cognitive ability, character skills, personality traits, level-k, bounded rationality, learning, convergence, non-equilibrium behavior, beauty contest, repeated games, structural modeling, theory of mind, intelligence, IQ, cognition, Raven test |
| JEL: | C92 C73 D83 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8236&r=neu |
| By: | Stephen V. Burks (Division of Social Science, University of Minnesota Morris); Connor Lewis (Division of Science and Math, University of Minnesota Morris); Paul Kivia (Division of Social Science, University of Minnesota Morris); Amanda Wiener (Division of Social Science, University of Minnesota Morris); Jon E. Anderson (Division of Science and Math, University of Minnesota Morris); Lorenz Götten (Faculty of Business and Economics, University of Lausanne); Colin DeYoung (Department of Psychology, University of Minnesota Twin Cities); Aldo Rustichini (Department of Economics, University of Minnesota Twin Cities) |
| Abstract: | We collected personality (Big Five) and demographic characteristics, and ran incentivized experiments measuring cognitive skills (non-verbal IQ, numeracy, backward induction/planning), and economic (time, risk) preferences, with 100 students at a small public undergraduate liberal arts college in the Midwestern US as part of a larger study that collected the same measures from 1,065 trainee truckers. Using standardized (z-score) versions of our variables we analyze their relative power to predict (1) timely graduation (four years or less), (2) graduation in six years or less, and (3) final GPA. The proactive aspect of Conscientious (but not the inhibitive one) has a large and robust positive effect on all three outcomes, and Agreeableness has a robust negative effect on both graduation outcomes, but not on GPA. Economic time preferences predict graduation in four years, and GPA. Cognitive skill measures predict as expected if entered individually in a multivariate model, but when all variables compete it is only our backward induction measure (“Hit15â€) that weakly predicts graduation in four years, and strongly predicts graduation in six years. Trainee truckers work in a different vocational setting and their results are appropriately different, but there is a common element: Hit15 also predicts job success (completing a one year employment contract that makes training free). We interpret Hit15 as capturing a specific part of the cognitive skills required for selfmanagement in non-routine settings—thinking backward from future goals to make the best current choice—that is not well measured by existing instruments, and suggest this deserves further scientific and institutional scrutiny |
| Keywords: | Big Five, cognitive skill, backward induction, economic preferences, GPA |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2014-01&r=neu |
| By: | Proto, Eugenio (University of Warwick and CAGE); Rustichini, Aldo (University of Minnesota) |
| Abstract: | Cooperating behavior may be fostered by personality traits re ecting either favorable inclination to others or willingness to comply with norms and rules. We test the relative importance of these two factors in an experiment where subjects provide real mental effort in two treatments with identical task, differing only by whether others' payment is affected. If the rst hypothesis is true, subjects reporting high Agreeableness score should put more effort; if the second is true, reporting higher Conscientiousness should predict more effort. We find experimental support for the second hypothesis but not for the first, as subjects reporting high Altruism do not behave consistently with this statement. |
| Keywords: | Personality Traits, Cooperation, Effort Provision |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:190&r=neu |
| By: | Gensowski, Miriam (University of Copenhagen) |
| Abstract: | Talented individuals are seen as drivers of long-term growth, but how do they realize their full potential? In this paper, I show that even in a group of high-IQ men and women, lifetime earnings are substantially influenced by their education and personality traits. I identify a previously undocumented interaction between education and traits in earnings generation, which results in important heterogeneity of the net present value of education. Personality traits directly affect men's earnings, with effects only developing fully after age 30. These effects play a much larger role for the earnings of more educated men. Personality and IQ also influence earnings indirectly through educational choice. Surprisingly, education and personality skills do not always raise the family earnings of women in this cohort, as women with very high education and IQ are less likely to marry, and thus have less income through their husbands. To identify personality traits, I use a factor model that also serves to correct for prediction error bias, which is often ignored in the literature. This paper complements the literature on investments in education and personality traits by showing that they also have potentially high returns at the high end of the ability distribution. |
| Keywords: | personality traits, social skills, cognitive skills, returns to education, life-time earnings, Big Five, human capital, factor analysis |
| JEL: | J24 I24 J16 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8235&r=neu |
| By: | Golsteyn B.H.H.; Schils T. (ROA) |
| Abstract: | In elementary school, girls typically outperform boys in languages and boys typically outperform girls in math. The determinants of these differences have remained largely unexplored. Using rich data from Dutch elementary schools, we decompose the differences in achievement into gender differences in endowments and returns to IQ and non-cognitive factors. This descriptive analysis is a thought experiment in which we show the consequences for school performance if girls and boys would have similar resources and take similar advantage of these resources. Our findings indicate that gender differences in resources with respect to social and instrumental skills and need for achievement can explain part of the differences in performance. Boys seem to be better equipped with these resources. Additionally, boys and girls employ their skills differently. Girls take more advantage of their IQ than boys. Yet, the largest part of this parameter effect is left unexplained by IQ and non-cognitive factors. |
| Keywords: | Analysis of Education; Education and Inequality; |
| JEL: | I21 I24 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umaror:2014007&r=neu |