New Economics Papers
on Neuroeconomics
Issue of 2014‒07‒13
three papers chosen by

  1. The Effect of Personality Traits on Subject Choice and Performance in High School: Evidence from an English Cohort By Mendolia, Silvia; Walker, Ian
  2. Ability Dispersion and Team Performance By Sander Hoogendoorn; Simon C. Parker; Mirjam van Praag
  3. The tactical utilization of cognitive biases in negotiations By Rhode, Alexander; Schönbohm, Avo; van Vliet, Jacobus

  1. By: Mendolia, Silvia (University of Wollongong); Walker, Ian (Lancaster University)
    Abstract: This paper investigates the relationship between personality traits in adolescence and performance in high school using a large and recent cohort study. In particular, we investigate the impact of locus of control, self-esteem and work ethics at age 15, on test scores at age 16, and on subject choices and subsequent performance at age 17-18. In particular, individuals with external locus of control or with low levels of self-esteem seem less likely to have good performance in test scores at age 16 and to pursue further studies at 17-18, especially in mathematics or sciences. We use matching methods to control for a rich set of adolescent and family characteristics and we find that personality traits do affect study choices and performance in test scores - particularly in mathematics and science. The results are stronger for adolescents from disadvantaged socio-economic backgrounds. We establish the robustness of our results using the methodology proposed by Altonji et al. (2005) that consists in making hypotheses as to the correlation between the unobservables that determine test scores and subjects' choices and, the unobservables that influence personality.
    Keywords: personality, education, locus of control, self-esteem
    JEL: I10 I21
    Date: 2014–06
  2. By: Sander Hoogendoorn (CPB Netherlands Bureau for Economic Policy Analysis, the Netherlands); Simon C. Parker (Ivey Business School, Western University, London, Canada); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: What is the effect of dispersed levels of cognitive ability of members of a (business) team on their team’s performance? This paper reports the results of a field experiment in which 573 students in 49 teams start up and manage real companies under identical circumstances. We ensured exogenous variation in — otherwise random — team composition by assigning students to teams based on their measured cognitive abilities (Raven test). Each team performs a variety of tasks, often involving complex decision making. The key result of the experiment is that the performance of business teams first increases and then decreases with ability dispersion. We seek to understand this finding by developing a model in which team members of different ability levels form sub-teams with other team members with similar ability levels to specialize in different productive tasks. Diversity spreads production over different tasks in order to escape diminishing marginal returns under specialization. The model comes with a boundary condition: our experimental finding is most likely to emerge in settings where different tasks exhibit moderate differences in their productive contributions to total output.
    Keywords: Ability dispersion, team performance, field experiment, entrepreneurship
    JEL: C93 D83 J24 L25 L26 M13 M54
    Date: 2014–05–06
  3. By: Rhode, Alexander; Schönbohm, Avo; van Vliet, Jacobus
    Abstract: The present paper conceptualizes the domain of psychological influence in negotiations and thereby proposes seven negotiations tactics which utilize the findings of cognitive bias research. After reviewing existing literature on cognitive biases in negotiations, the paper argues that their persuasive utilization in negotiations has not been discussed extensively so far. Inspired by the research findings on anchoring in negotiations, the paper develops tactics which alter information sets of counterparties in such a way that their decision making becomes biased, but leave their incentive structures untouched. The theoretical foundations of these value-claiming tactics are accompanied by short examples, where bargainers play on the cognitive biases of their counterparties to sell proposals and persuade reluctant counterparties. The authors thus explain the effectiveness of widely used negotiation tactics and allow a greater understanding of negotiators' decision making processes and provide recommendations for practitioners. -- Das Arbeitspapier behandelt psychologische Einflüsse in Verhandlungen und schlägt sieben Verhandlungstaktiken auf der Basis der Forschung über kognitive Verzerrungen vor. Der Literaturüberblick zeigt, dass die Übertragung kognitiver Verzerrungen auf Verhandlungssituationen noch Ausbaupotential besitzt. Inspiriert von der Literatur zum Thema Ankereffekt in Verhandlungen, werden Taktiken entwickelt, welche die Wahrnehmung der Gegenseite beeinflussen, ohne ihre Anreizstruktur zu verändern.Die theoretischen Grundlagen dieser auf den eigenen Vorteil ausgerichteten Taktiken werden durch kurze Beispiele illustriert, in denen Verhandler kognitive Verzerrungen ihrer Verhandlungspartner nutzen, um Vorschläge zu verkaufen, bzw. die Gegenseite zu überreden. Die Autoren erklären so die Effektivität häufig angewandter Verhandlungstaktiken, beleuchten den inneren Entscheidungsprozess bei Verhandlungen und generieren Empfehlungen für Praktiker.
    Date: 2014

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