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on Neuroeconomics |
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Issue of 2016‒06‒25
seven papers chosen by |
| By: | Duffy, Sean; Naddeo, JJ; Owens, David; Smith, John |
| Abstract: | It is well-known that laboratory subjects often do not play mixed strategy equilibrium games according to the equilibrium predictions. In particular, subjects often mix with the incorrect proportions and their actions often exhibit serial correlation. However, little is known about the role of cognition in these observations. We conduct an experiment where subjects play a repeated hide and seek game against a computer opponent programmed to play either a strategy that can be exploited by the subject (a naive strategy) or designed to exploit suboptimal play of the subject (an exploitative strategy). The subjects play with either fewer available cognitive resources (under a high cognitive load) or with more available cognitive resources (under a low cognitive load). While we observe that subjects do not mix in the predicted proportions and their actions exhibit serial correlation, we do not find strong evidence these are related to their available cognitive resources. This suggests that the standard laboratory results on mixed strategies are not associated with the availability of cognitive resources. Surprisingly, we find evidence that subjects under a high load earn more than subjects under a low load. However, we also find that subjects under a low cognitive load exhibit a greater rate of increase in earnings across rounds than subjects under a high load. |
| Keywords: | bounded rationality, experimental economics, working memory load, cognition, learning, mixed strategies |
| JEL: | C72 C91 |
| Date: | 2016–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71878&r=neu |
| By: | Thomas Buser (University of Amsterdam, the Netherlands); Leonie Gerhards (University of Hamburg, Germany); Joël J. van der Weele (University of Amsterdam, the Netherlands) |
| Abstract: | People typically update their beliefs about their own abilities too little in response to feed-back, a phenomenon known as “conservatism”, and some studies suggest that they overweight good relative to bad signals (“asymmetry”). We measure individual conservatism and asymmetry in three tasks that test different cognitive skills, and study entry into a winner-takes-all competition based on similar skills. We show that individual differences in feedback responsiveness explain an important part of the variation in confidence and competition entry decisions. Conservatism is correlated across tasks and predicts competition entry both by influencing beliefs and independently of beliefs, suggesting it can be considered a personal trait. Subjects tend to be more conservative in tasks that they see as more ego-relevant and women are more conservative than men. Asymmetry is less stable across tasks, but predicts competition entry by increasing self-confidence. |
| Keywords: | Bayesian updating; feedback; confidence; identity; competitive behavior |
| JEL: | C91 C93 D83 |
| Date: | 2016–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20160043&r=neu |
| By: | Subha Mani; Saurabh Singhal; Smriti Sharma; Utteeyo Dasgupta |
| Abstract: | Heterogeneity in subject populations often necessitates choosing an elicitation task that is intuitive, easy to explain, and simple to implement. Given that subject behaviour often differs dramatically across tasks when eliciting risk preferences, caution needs to be exercised in choosing one risk elicitation task over another.Using a within-subject design, we compare behaviour in the simple most investment game (Gneezy and Potters 1997) and the ordered lottery choice game (Eckel and Grossman 2002) to evaluate whether the simpler task allows us to elicit attitudes consistent with those elicited from the ordered lottery task.Using a large sample of over 2000 subjects, we find risk attitudes to be fairly stable across the two tasks. Our results further indicate that the consistency of risk attitudes across the tasks depends on gender of the subject, quantitative skills, father.s education level, and dispositional factors such as locus of control and Big Five personality traits. |
| Keywords: | Experimental design, Risk |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2016-047&r=neu |
| By: | Gervas Huxley; Mike W. Peacey |
| Abstract: | In this paper we develop the observation that college students may suffer from self-control problems (O'Donoghue and Rabin (2007)). In our model students face a self-control problem when making choices about how to learn: students acquire education using different combinations of study and tuition (S and T). We consider an `asymmetric' self-control problem, where students can commit to T but not S and investigate how this affects their decisions. We show that the degree of self-awareness interacts with how students learn and how this determines the ability to self-correct by precommitment. Finally we show how the appropriate pricing of tuition can ameliorate these problems. |
| Keywords: | Human Capital, Learning, Self-control, Hyperbolic Discounting. |
| Date: | 2016–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:bri:uobdis:16/675&r=neu |
| By: | Carla Guerriero (Università di Napoli Federico II and CSEF); John Cairns (London School of Hygiene and Tropical Medicine); Fabrizio Bianchi (IFC CNR Pisa); Liliana Cori (IFC CNR Pisa) |
| Abstract: | Despite the importance of including children’s preferences in the valuation of their own health benefits no study investigated the ability of children to understand willingness to pay questions. Using a contingent valuation study we elicit children’s and parents’ willingness to pay (WTP) to reduce children’s risk of an asthma attack. Our results suggest that children are able to understand and value their own health risk reductions and their ability to do so improves with age. Child age was found to be inversely related to parents’ and children’s WTP. The results also suggest that non-paternal altruism is predictive of children’s WTP. For parents, care for their own-health, was found to be inversely related with their WTP for children’s risk reductions. Comparison of parents’ vs. children WTP suggest that parents are willing to sacrifice for their child’s health risk reduction an amount that is approximately twice the size of their children. The analysis of matched pairs of parents and children suggest that there are within-household similarities as the child’s WTP is positively related to parents’ WTP. |
| Keywords: | willingness to pay, contingent valuation, children’s preferences, children’s rationality |
| Date: | 2016–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:448&r=neu |
| By: | Ito, Seiro |
| Abstract: | In Montiel Olea and Strzalecki (2014), authors have axiomatically developed an algorithm to infer the parameters of beta-delta model of cognitive bias (present and future biases). While this is extremely useful, it allows the implied beta to become very large when the response is impatient in the future choices relative to present choices, i.e., when there is a strong future bias. I modify the model to further exponentiate the functional form to get more reasonable beta values. |
| Keywords: | Consumption, Consumers, Psychology, Discount factor, Experimental method |
| JEL: | C91 D99 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper605&r=neu |
| By: | Eva M. Berger; Luke Haywood |
| Abstract: | This paper investigates the effect of locus of control (LOC) on the length of mothers’ employment break after childbirth. Using data from the German Socio-Economic Panel Study (SOEP), duration data reveals that women with an internal LOC return to employment more quickly than women with an external LOC. We find evidence that this effect is mainly related to differential appreciation of the career costs of longer maternity leave. Given the high level of job protection enjoyed by mothers in Germany, economic consequences of differences in this non-cognitive skill can be expected to be larger in other settings. |
| Keywords: | Locus of Control, Non-cognitive skills, personality, maternal employment, female labor supply, survival analysis |
| JEL: | J22 J24 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1586&r=neu |