nep-neu New Economics Papers
on Neuroeconomics
Issue of 2015‒09‒18
seven papers chosen by

  1. Cognitive (Ir)reflection: New Experimental Evidence By Cueva, Carloa; Iturbe-Ormaetxe, Iñigo; Mata-Pérez, Esther; Ponti, Giovanni; Sartarelli, Marcello; Yu, Haihan; Zhukova, Vita
  2. Fetal Malnutrition And Academic Success: Evidence From Muslim Immigrants In Denmark By Jane Greve; Marie Louise Schultz-Nielsen; Erdal Tekin
  3. Clever enough to tell the truth By Bradley J. Ruffle, Yossef Tobol
  4. Cognition biases in real estate investment decisions. Empirical evidence from the german development market By K. Meyer; A. Pfnür
  5. Personality and Sales Performance By Y.Leng Chow; S.Eng Ong
  6. Internet use and subjective well-being in China By Nie, Peng; Nimrod, Galit; Sousa-Poza, Alfonso
  7. The Interaction of Testosterone and Cortisol Is Associated With Attained Status in Male Executives. By Sherman, Gary; Lerner, Jennifer S.; Josephs, Robert A.; Renshon, Jonathan; Gross, James J.

  1. By: Cueva, Carloa (Universidad de Alicante); Iturbe-Ormaetxe, Iñigo (Universidad de Alicante); Mata-Pérez, Esther (Universidad de Alicante); Ponti, Giovanni (Universidad de Alicante); Sartarelli, Marcello (Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica); Yu, Haihan (Universidad de Alicante); Zhukova, Vita (Universidad de Alicante)
    Abstract: We study how cognitive abilities correlate with behavioral choices by collecting evidence from almost 1,200 subjects across eight experimental projects concerning a wide variety of tasks, including some classic risk and social preference elicitation protocols. The Cognitive Reflection Test (CRT) has been administered to all our experimental subjects, which makes our dataset one of the largest in the literature. We partition our subject pool into three groups depending on their CRT performance. Reflective subjects are those answering at least two of the three CRT questions correctly. Impulsive subjects are those who are unable to suppress the instinctive impulse to follow the intuitive -although incorrect- answer in at least two 2 questions. The remaining subjects form a residual group. We find that females score significantly less than males in the CRT and that, in their wrong answers, impulsive ones are observed more frequently. The 2D-4D ratio, which is higher for females, is correlated negatively with subject's CRT score. We also find that differences in risk attitudes across CRT groups crucially depend on the elicitation task. Finally, impulsive subjects have higher social (inequity-averse) concerns, while reflective subjects are more likely to satisfy basic consistency requirements in lottery choices.
    Keywords: behavioral economics; cognitive reflection; gender effects; experiments
    JEL: C91 D81 J16
    Date: 2015–09–07
  2. By: Jane Greve; Marie Louise Schultz-Nielsen; Erdal Tekin
    Abstract: This paper examines the impact of potential fetal malnutrition on the academic proficiency of Muslim students in Denmark. We account for the endogeneity of fetal malnutrition by using the exposure to the month of Ramadan during time in utero as a natural experiment, under the assumption that some Muslim women might have fasted during Ramadan when they were pregnant. In some of our specifications, we use a sample of students from predominantly non-Muslim countries as an additional control group to address potential seasonality in cognitive outcomes in a difference-in-differences framework. Our outcome measures are the standardized test scores from the national exams on the subjects of Danish, English, Math, and Science administered by the Danish Ministry of Education. Our results indicate that fetal exposure to Ramadan has a negative impact on the achievement scores of Muslim students, especially females. Our analysis further reveals that most of these effects are concentrated on the children with low socioeconomic status (SES) background. These results indicate that fetal insults such as exposure to malnutrition may not only hamper the cognitive development of children subject to such conditions, but it may also complicate the efforts of policy-makers in improving the human capital, health, and labor market outcomes of low-SES individuals. Our findings highlight the importance of interventions designed to help economically disadvantaged women during pregnancy.
    JEL: I12 I14 I24 J15
    Date: 2015–09
  3. By: Bradley J. Ruffle, Yossef Tobol (Wilfrid Laurier University)
    Abstract: We conduct a field experiment on 427 Israeli soldiers who each rolled a six-sided die in private and reported the outcome. For every point reported, the soldier received an additional half-hour early release from the army base on Thursday afternoon. We find that the higher a soldier’s military entrance score, the more honest he is on average. We replicate this finding on a sample of 156 civilians paid in cash for their die reports. Furthermore, the civilian experiments reveal that two measures of cognitive ability predict honesty, whereas self-report honesty questions and a consistency check among them are of no value. We provide a rationale for the relationship between cognitive ability and honesty and discuss the generalizability of this result.
    Keywords: honesty, cognitive ability, soldiers, high non-monetary stakes, regression discontinuity design
    JEL: C93 M51
    Date: 2015–09–01
  4. By: K. Meyer; A. Pfnür
    Abstract: Cognitive biases have been intensely studied in security markets so far (Simon 1987). Flyvberg (2005) also found, that project management decisions in the construction of infrastructure suffer from cognitive biases. In the field of real estate development investment decisions no empirical analysis of these social-psychological effects like miscalibration (e.g. Zacharakis/Sheperd, 2001), over optimism (e.g. Heating, 2002) or escalating commitment (Staw/Ross 1987) are known so far. A lot of actual large scale projects like the new Berlin Brandenburg Airport or the new Hamburg Opera House Elbphilharmonie, which is one of the 10 most expensive single building project developments of the last years gives a lot of impressionistically evidence, that the cognition bias of project investment decision makers is one of the most important reasons for running out of time and costs. Therefore we develop a model of cognition biases in real estate development decision situations containing the most relevant biases and the key types of decision makers and situations. Real estate development decisions differ from security investments, because there are several parties who work together in one relatively long lasting project, while they can physically see the project and it's success grow. In a large-scale empirical survey among all types of real estate project decision makers (e.g. sector, hierarchy, personal experience) we analyze and compare the individual degrees of cognition biases with methods coming from the empirical social research. We measure cognition biases and their specific reasons. The results of several univariate and multivariate analyses show heavily cognition biases in real estate investment decisions, which vary intensely between different types of decision makers. Especially in real estate development decisions the degree of bias depends on the individual objective and subjective knowledge and the incentives of the decision maker. We also found evidence, that the degree of the bias in decision situations, which results in inefficiency, is not given, but can reduced by far. So we are able to derive some methodological implications for theory and practice in the field of efficient institutionalizing the project.
    Keywords: Cognition Bias; Decicion Making; Real Estate Development; Real Estate Invesmtent; Risk Management
    JEL: R3
    Date: 2015–07–01
  5. By: Y.Leng Chow; S.Eng Ong
    Abstract: Research in psychology and behavioral studies have shown that integrity validation by way of meta-analysis is important in predicting job performance and counterproductive job behaviors (Deniz, Chockalingam and Schmidt, 1993). Dependability testing for personnel selection is also routinely carried out by financial institutions and government agencies (Sackett, Burris and Callahan, 1989). The application of personality profiling for real estate salespeople is largely absent in the literature save for isolated work (see Brinkmann, 2009). Thus, the objective of this study is to carry out a personality profiling exercise for real estate salespeople in Singapore and coupled with their corresponding observable characteristics such as age, gender, qualifications, etc., to identify both an empirical and personality profile of successful real estate salespeople in Singapore. Using these results, we can further compare this profile with their Western counterparts to check if there are cross-cultural differences. The first phase of our study was carried out in December 2013. 185 respondents from one brokerage agency firm took our 16 PF test. Out of these respondents, 25% (47 pax) were identified to be in the Top 300 ranking in terms of sales performance. We are currently preparing to implement the second phase of our study for respondents from two other agency firms. In terms of methodology, we adopted the Sixteen Personality Factor Questionnaire (16PF) developed by Raymond Cattell. The idea is that we could better understand and predict human behavior using 16 narrow personality descriptors (such as warmth, reasoning, emotional stability, etc.) and 5 broader primary personality descriptors (such as extraversion, anxiety, independence, etc.). We were able to match the subject's personality indicators with observable characteristics (age, gender, education level, number of years with company and whether the salesperson joined from a different agency). We ran a probit model using a dummy indicator of one to identify the top salespeople (Top 300 ranking) as the dependent variable and the list of 16 narrow personality descriptors and observable characteristics as the explanatory variables. Our initial results indicate that in terms of observable characteristics, top salespeople tend to be younger, more educated, and have stayed with the company for a longer period of time. The last finding hints at a possible survivorship bias; that is, only performing sales
    Keywords: Cross Cultural; Personality Indicators; Successful Salespeople
    JEL: R3
    Date: 2015–07–01
  6. By: Nie, Peng; Nimrod, Galit; Sousa-Poza, Alfonso
    Abstract: Using data from the 2010 China Family Panel Studies, we analyze the association between Internet use and various measures of subjective well-being (SWB) in a sample of 16- to 60- year-old Chinese. Our analysis shows that although intensive Internet use is significantly associated with lower levels of SWB, we hardly observe any associations when the focus is on participation in specific online activities. Nevertheless, SWB depends on perceptions of Internet use; that is, the importance that different individuals ascribe to different purposes for using the Internet and how much they believe that their Internet use is displacing other activities. Our results suggest that, contrary to previous findings, differences in beneficial outcomes (the third level digital divide) do not necessarily arise from individuals' actual Internet use (the second level digital divide) but rather may result from their subjective perceptions of such usage. Our findings also point to a possible cultural factor that puts Chinese Internet users at psychological risk.
    Keywords: China,digital divides,depression,happiness,Internet use,life satisfaction
    JEL: I10 D10 J10 Q53
    Date: 2015
  7. By: Sherman, Gary; Lerner, Jennifer S.; Josephs, Robert A.; Renshon, Jonathan; Gross, James J.
    Abstract: Are hormone levels associated with the attainment of social status? Although endogenous testosterone predicts status-seeking social behaviors, research suggests that the stress hormone cortisol may inhibit testosterone’s effects. Thus, individuals with both high testosterone and low cortisol may be especially likely to occupy high-status positions in social hierarchies while individuals with high testosterone and high cortisol may not. We tested this hypothesis by recruiting a sample of real executives and examining testosterone, cortisol, and a concrete indicator of attained status: the number of subordinates over which the executive has authority. Despite the myriad nonhormonal factors that determine organizational promotion, the executives’ endogenous testosterone and cortisol interacted to significantly predict hierarchical position: Testosterone positively predicted executives’ number of subordinates, but only among low-cortisol executives. The results imply that reducing cortisol levels via stress reduction may be a critical goal not only because doing so will improve health but also because doing so may enhance leadership potential.
    Date: 2015

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.