nep-neu New Economics Papers
on Neuroeconomics
Issue of 2016‒10‒16
four papers chosen by

  1. Cognitive Reflection Predicts Decision Quality in Individual and Strategic Decisions By Mark Schneider; David Porter
  2. It is Not Just Confusion! Strategic Uncertainty in an Experimental Asset Market By Eizo Akiyama; Nobuyuki Hanaki; Ryuichiro Ishikawa
  3. Maternal depression symptomatology and child well-being outcomes: limited evidence for a causal relationship. By Escobal, Javier; Benites, Sara
  4. Cognitive skills, non-cognitive skills, and family background: evidence from sibling correlations By Anger, Silke; Schnitzlein, Daniel

  1. By: Mark Schneider (Economic Science Institute, Chapman University); David Porter (Economic Science Institute, Chapman University)
    Abstract: Cognitive reflection has been shown to be an important trait which is correlated with the propensity to: take risks, delay gratification, and form accurate beliefs about others’ behavior. However, previous research has not cleanly identified whether reflective thinkers make ‘better’ decisions than intuitive thinkers, since inferences of decision quality are confounded by inferences regarding risk preferences, time preferences, and beliefs. We directly test for differences in decision quality between reflective thinkers and intuitive thinkers in both individual and strategic decisions using a design which makes it possible to objectively rank risky and strategic choices, independent of one’s attitudes toward risk or one’s beliefs about the strategic sophistication or altruism of other decision makers. Employing a lottery choice task involving a dominant and a dominated alternative, and implementing multiple rounds of a second price auction, we find that the tendency to cognitively reflect has strong predictive power across domains (reasoning tasks, choices between lotteries, bidding behavior in auctions), and across time (as the tasks were administered on separate dates). In particular, the same subjects who engaged in reflective thinking on simple reasoning problems were also more likely to choose optimally in the lottery choice task and to bid closer to the dominant strategy equilibrium in second price auctions. We also find that experience helps to narrow the gap in performance between reflective and intuitive thinkers.
    Keywords: Cognitive Reflection, Stochastic Dominance, Second Price Auction
    Date: 2016
  2. By: Eizo Akiyama (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba); Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique); Ryuichiro Ishikawa (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba)
    Abstract: To what extent is the observed mispricing in experimental asset markets caused by strategic uncertainty and by confusion? We address this question by comparing subjects' initial price forecasts in two market environments: one with six human traders, and the other with one human and five computer traders. We find that both strategic uncertainty and confusion contribute equally to the median initial forecast deviation from the fundamental value. The effect of strategic uncertainty is greater for subjects with a perfect score in the Cognitive Reflection Test, and it is not significant for those with low scores.
    Keywords: Asset markets, Computer traders, Cognitive Reflection Test,Bounded rationality, Strategic uncertainty, Experiment
    Date: 2016–09–07
  3. By: Escobal, Javier (Grupo de Análisis para el Desarrollo (GRADE)); Benites, Sara (Grupo de Análisis para el Desarrollo (GRADE))
    Abstract: The paper explores whether or not there is evidence for a causal link between maternal depression symptomatology and child wellbeing. Considering three rounds of data from the Peruvian Young Lives (PYL) longitudinal study sample, the paper explores this relationship by using the SRQ-20 instrument, which is typically used as a screening tool for common mental disorders, and by collecting information about mothers’ socioeconomic characteristics and their children’s well-being outcomes. We found a low correlation of SRQ-20 scores across rounds, suggesting that the instrument may be capturing short-term depression or anxiety symptoms rather than chronic mental illness. Furthermore, the SRQ-20 instrument is correlated both with characteristics of the mother and with child well-being indicators, which change over time (nutritional, health, and educational outcomes as well as feelings and attitudes). The study shows that the magnitude of the relationship between the mental health indicator and the child well-being outcomes may be severely biased in a regression that neglects the possible endogeneity of the mental health indicator. Finally, besides maternal age, education, and ethnicity background, socioeconomic shocks are a key determinant of both depression and anxiety symptoms as well as of child well-being outcomes in the first year following birth of the child (PYL round one), where SRQ-20 scores were the highest.
    Keywords: Salud mental, Análisis causal, Perú, SRQ-20, Mental health, Causation, Causal analysis, Inference, Peru
    JEL: I10 I30
    Date: 2016
  4. By: Anger, Silke (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Schnitzlein, Daniel
    Abstract: "This paper estimates sibling correlations in cognitive and non-cognitive skills to evaluate the importance of family background for skill formation. Based on a large representative German dataset including IQ test scores and measures of non-cognitive skills, a restricted maximum likelihood model indicates a strong relationship between family background and skill formation. Sibling correlations in non-cognitive skills range from 0.22 to 0.46; therefore, at least one-fifth of the variance in these skills results from shared sibling-related factors. Sibling correlations in cognitive skills are higher than 0.50; therefore, more than half of the inequality in cognition can be explained by shared family background. Comparing these findings with those in the intergenerational skill transmission literature suggests that intergenerational correlations capture only part of the influence of family on children's cognitive and non-cognitive skills, as confirmed by decomposition analyses and in line with previous findings on educational and income mobility." (Author's abstract, IAB-Doku) ((en))
    JEL: J24 J62
    Date: 2016–10–10

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