nep-neu New Economics Papers
on Neuroeconomics
Issue of 2015‒01‒09
five papers chosen by

  1. Voluntary sleep choice and its effects on Bayesian decisions: A study of two samples of college students. By David L. Dickinson; Sean P.A. Drummond; Jeff Dyche
  2. Cognitive Ability and the Effect of Strategic Uncertainty By Nobuyuki Hanaki; Nicolas Jacquemet; Stéphane Luchini; Adam Zylberstejn
  3. Locus of Control and the Labor Market By Cobb-Clark, Deborah A.
  4. Think Twice Before Running! Bank Runs and Cognitive Abilities By Hubert János Kiss; Ismael Rodriguez-Lara; Alfonso Rosa-García
  5. Affective States and the Notion of Happiness: A Preliminary Analysis By Welsch Heinz; Jan Kühling

  1. By: David L. Dickinson; Sean P.A. Drummond; Jeff Dyche
    Abstract: This study examines whether voluntary sleep restriction at commonly experienced levels impacts decision-making in a Bayesian choice task. Participants were largely traditional age college students from a regional state university (n=100) and a federal military academy (n=99). Sleep was measured by actigraphy over a one-week period, followed by performance of a decision task. The task involved two sources of information, base rate odds and sample evidence, with subjects asked to make a probability judgment. Results found that subjects with nightly sleep < 6 hr (sleep deprived=SD), relative to those with > 7 hr, placed less decision weight on new evidence, relative to base rate information, in making difficult choices. This result is mediated by gender and differs when comparing cadets with traditional student subjects. For easier choices, voluntary SD did not affect relative decision weights placed on the two sources of available information, and results were similar across institutions and by gender. Key Words:
    Date: 2014
  2. By: Nobuyuki Hanaki (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS); Nicolas Jacquemet (Université de Lorraine (BETA) and Paris School of Economics); Stéphane Luchini (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS); Adam Zylberstejn (Université de Lyon)
    Abstract: How is one’s cognitive ability related to the way one responds to strategic uncertainty? We address this question by conducting a set of experiments in simple 2 x 2 dominance solvable coordination games. Our experiments involve two main treatments: one in which two human subjects interact, and another in which one human subject interacts with a computer program whose behavior is known. By making the behavior of the computer perfectly predictable, the latter treatment eliminates strategic uncertainty. We find that subjects with higher cognitive abilities are more sensitive to strategic uncertainty than those with lower cognitive abilities.
    Keywords: strategic uncertainty, robot, bounded rationality, Experiment
    JEL: C92 D83
    Date: 2014–12–16
  3. By: Cobb-Clark, Deborah A. (University of Melbourne)
    Abstract: This paper reviews the role of locus of control in the labor market. I begin with a discussion of the conceptual origins of locus of control, including its relationship to related concepts such as self-efficacy, motivation, and self-control. The relationship between locus of control and labor market success is then summarized. In doing so, I pay careful attention to what we know about three potential mechanisms – human capital investments, hiring decisions, and optimal incentive contracts – through which locus of control might operate. Finally, the broader implications of these relationships for public policy and future research are discussed.
    Keywords: locus of control, labor market, behavioral economics
    JEL: J01 J08
    Date: 2014–11
  4. By: Hubert János Kiss (‘Momentum’ Game Theory Research Group, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Eötvös Loránd University - Department of Economics); Ismael Rodriguez-Lara (Middlesex University London - Business School and LUISS Guido Carli University, Rome); Alfonso Rosa-García (Facultad de Ciencias Juridicas y de la Empresa, Universidad Catolica San Antonio)
    Abstract: We assess the impact of cognitive abilities on withdrawal decisions in a bank-run game. In our setup, depositors choose sequentially between withdrawing or keeping their funds deposited in a common bank. They may observe previous decisions depending on the information structure. Theoretically, the last depositor in the sequence of decisions has a dominant strategy and should always keep the funds deposited, regardless of what she observes (if anything). Recognizing the dominant strategy, however, is not always straightforward. If there exists strategic uncertainty (e.g., the last depositor has no information about predecessors’ decisions) the identification of the dominant strategy requires harder thinking than when there is not strategic uncertainty (e.g., the last depositor is informed about all previous decisions). We find that cognitive abilities, as measured by the Cognitive Reflection Test (CRT), predict withdrawals in the presence of strategic uncertainty (participants with higher abilities tend to identify the dominant strategy more easily) but the CRT does not predict behavior when there is no strategic uncertainty.
    Keywords: bank runs, coordination game, observability of actions, cognitive abilities, strate-gic uncertainty
    JEL: C91 D03 D8 G02 J16
    Date: 2014–11
  5. By: Welsch Heinz (University of Oldenburg, Department of Economics); Jan Kühling (University of Oldenburg, Department of Economics)
    Abstract: Large-scale social surveys typically elicit levels of happiness and/or life satisfaction. This paper studies how such reports of happiness and life satisfaction are related to measures of positive affect (PA) and negative affect (NA). Major findings are the following: (1) PA and NA levels jointly predict happiness better than they predict life satisfaction. (2) PA levels predict happiness better than do NA levels. (3) NA levels predict life satisfaction better than do PA levels. (4) The PA items that predict happiness include those that predict life satisfaction (but not vice versa). (5) The NA items that predict happiness are distinct from those that predict life satisfaction. The study contributes to the literature by characterizing reported happiness and life satisfaction in terms of the specific positive and negative affects involved, thus clarifying their respective affective state content. Finding (4) is consistent with the mediator model of affective and cognitive well-being, according to which people in part directly rely on the affective component to judge life satisfaction. Our results are robust to several methodological strategies, but preliminary with regard to the small sample size (N = 144).
    Keywords: happiness; life satisfaction; positive affect; negative affect; social welfare
    Date: 2014–11

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