nep-neu New Economics Papers
on Neuroeconomics
Issue of 2016‒11‒06
four papers chosen by

  1. Cognitive Aging: A Primer By Anek Belbase; Geoffrey T. Sanzenbacher
  2. Locus of Control and Performance Appraisal By Heywood, John S.; Jirjahn, Uwe; Struewing, Cornelia
  3. Handedness, Ability, Earnings and Risk. Evidence from the Lab By Marcello Sartarelli
  4. The influence of induced care and anger motives on behavior, beliefs and perceptions in a public goods game By Bartke, Simon; Bosworth, Steven J.; Snower, Dennis; Chierchia, Gabriele

  1. By: Anek Belbase; Geoffrey T. Sanzenbacher
    Abstract: Cognitive aging has received growing attention in recent years as many researchers have documented a significant age-related decline in the brain’s processing ability. This decline could potentially undermine retirement security in two ways: 1) by limiting the ability to work longer; and 2) by eroding the capacity to manage finances in retirement. This brief summarizes the explosion of recent research on cognitive aging by answering basic questions about what researchers are learning and why their findings matter to retirement experts and the public. This overview is the first brief in a series of three; the other two will focus on how cognitive aging affects the ability of individuals to work between ages 50-70 and to handle personal finances between ages 70-90. The discussion proceeds as follows. The first section introduces definitions and measures of cognitive ability. The second section discusses how researchers identify changes in cognitive ability with age, while the third summarizes their findings. The fourth section discusses how age-related changes in different cognitive capacities can affect real-world performance. The final section concludes that: 1) most older workers can maintain their productivity up to age 70, although they will generally need more time to learn new skills or concepts; and 2) many retirees can continue to manage their own financial affairs in their 70s and 80s, though about one quarter will likely develop a cognitive impairment that will pose a threat to their financial independence.
    Date: 2016–11
  2. By: Heywood, John S. (University of Wisconsin, Milwaukee); Jirjahn, Uwe (University of Trier); Struewing, Cornelia (University of Trier)
    Abstract: This work contributes to the literature demonstrating an important role for psychological traits in labor market decisions. We show that West German workers with an internal locus of control sort into jobs with performance appraisals. Appraisals provide workers who believe they control their environment a tool to demonstrate their value and achieve their goals. We confirm that workers who are risk tolerant also sort into jobs with performance appraisals but explain why the influence of the locus of control and risk tolerance should not be additive. We demonstrate this by estimating a routinely large and significantly negative interaction in our sorting equations. We also show that important patterns of sorting are revealed only when taking into account the interaction of locus of control and risk tolerance.
    Keywords: locus of control, risk attitude, performance appraisal, performance pay, sorting, extrinsic rewards, intrinsic motivation
    JEL: D03 J33 M52
    Date: 2016–10
  3. By: Marcello Sartarelli (Dpto. Fundamentos del Análisis Económico)
    Abstract: The relationship between handedness, ability and, in addition, their joint role in explaining earnings and decisions under risk is studied experimentally to shed new light on the mechanisms behind the mixed evidence in survey data. Data on 432 under graduate students show that left-handed (L) do not obtain a significantly different Cognitive Reflection Test score relative to others nor different payoffs in a stylized labour market with agents working for principals and being paid for exerting costly effort, a proxy for earnings. In addition, they are not significantly more risk averse. In partial contrast, their self-reported achievement at university tends to be significantly higher and driven by females although weakly for some specifications. Finally, when looking at personality traits, measured using the Big Five test, L are significantly more agreeable, showing higher preferences for cooperation, and also tend to be more extroverted, in particular more sociable.
    Keywords: Ability, Big Five, CRT, earnings, gender, handedness, leftie, left-handed, personality traits, risk.
    JEL: C91 D81 D87
    Date: 2016–10
  4. By: Bartke, Simon; Bosworth, Steven J.; Snower, Dennis; Chierchia, Gabriele
    Abstract: This study analyzes the stability of preferences through the lens of psychological motives. We report the results of a public goods experiment in which subjects were induced with the motives of Care and Anger through autobiographical recall. Subjects' preferences, beliefs, and perceptions under each motive are compared with those of subjects experiencing a neutral autobiographical recall condition. We find that Care elicits significantly higher contributions than Anger, with Control treatment contributions in between. This is primarily driven by changes in conditional contribution schedules (measuring preferences) across treatments, though higher beliefs explain part of the effect that Care has on giving. These results are robust to checking for comprehension of the game's incentives. We also observe concomitant differences in attention to own and other's payoffs (using mouse tracking) as well as perceptions of the game's incentive structure (harmony) - particularly for subjects motivated by Anger. We interpret our findings as suggesting that people have access to multiple preferences that depend on how they perceive the decision context.
    Keywords: public goods,motivation,stability of preferences,anger,care,framing
    JEL: C92 H41 D64 D03
    Date: 2016

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