New Economics Papers
on Neuroeconomics
Issue of 2014‒08‒09
four papers chosen by

  1. Adolescents, Cognitive Ability, and Minimax Play By Shachat, Jason; Geng, Sen; Peng, Yujia; Zhong, Huizhen
  2. Cognitive functioning and retirement in Europe By Laura Bianchini; Margherita Borella
  3. Too Proud to Stop: Regret in Dynamic Decisions By Paul Viefers; Philipp Strack
  4. Is response time predictive of choice? An experimental study of threshold strategies By Schotter, Andrew; Trevino, Isabel

  1. By: Shachat, Jason; Geng, Sen; Peng, Yujia; Zhong, Huizhen
    Abstract: We conduct experiments with adolescent participants on repeated fixed play in three different zero-sum games which have mixed strategy minimax solutions. Further, we collect subject information on cognitive abilities and participation rates in competitive activities. We find the adolescents' correspondences with and deviations from minimax play largely consistent with previously and widely studied adult populations. Further, we find strategic sophistication in terms of implementation of the mixed minimax strategy as well as earnings are not correlated with cognitive ability nor previous experience in competitive situations.
    Keywords: Minimax; experimental game; adolescent; cognitive abilities
    JEL: C72 C93 D03
    Date: 2014–08–01
  2. By: Laura Bianchini (University of Torino & CeRP, Collegio Carlo Alberto); Margherita Borella (University of Torino, CeRP, Collegio Carlo Albero & NetSpar)
    Abstract: We investigate the effect of retirement on cognitive functioning using the Survey on Health, Ageing and Retirement in Europe (SHARE). The availability of a panel dataset allows to use a fixed effect estimator which is crucial to estimate the effect of individual transitions into retirement on our memory measure, word recall. Our main finding is that, conditional on the memory average age path of the typical individual, time spent in retirement has a positive effect on word recall. College educated or highly skilled workers benefit more than average from retirement, as do those individuals who declare to spend time reading books.
    Keywords: cognitive functioning, retirement, panel estimation
    JEL: I12 J24 J26
    Date: 2014–01
  3. By: Paul Viefers; Philipp Strack
    Abstract: Many economic situations involve the timing of irreversible decisions. E.g. People decide when to sell a stock or stop searching for a better price. We analyze the behavior of a decision maker who evaluates his choice relative to the ex-post optimal choice in an optimal stopping task. We derive the optimal strategy under such regret preferences, and show how it is different from that of an expected utility maximizer. We also show that if the decision maker never commits mistakes the behavior resulting from this strategy is observationally equivalent to that of an expected utility maximizer. We then test our theoretical predictions in the laboratory. The results from a structural discrete choice model we fit to our data provide strong evidence that many people's stopping behavior is largely determined by the anticipation of and aversion to regret.
    Keywords: Optimal stopping, Dynamic behavior, Regret
    JEL: D3 C91
    Date: 2014
  4. By: Schotter, Andrew; Trevino, Isabel
    Abstract: This paper investigates the usefulness of non-choice data, namely response times, as a predictor of threshold behavior in a simple global game experiment. Our results indicate that the signal associated to the highest or second highest response time at the beginning of the experiment are both unbiased estimates of the threshold employed by subjects at the end of the experiment. This predictive ability is lost when we move to the third or higher response times. Moreover, the response time predictions are better predictors of observed behavior than the equilibrium predictions of the game. They are also robust, in the sense that they characterize behavior in an out-of-treatment exercise where we use the strategy method to elicit thresholds. This paper is the first to point out the predictive power of response times in a strategic situation. --
    Keywords: response time,threshold strategies,global games
    JEL: C71 C9 D03 D89
    Date: 2014

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