nep-neu New Economics Papers
on Neuroeconomics
Issue of 2017‒02‒19
three papers chosen by

  1. Cognitive abilities, institutions and software piracy: a note By Odilova, Shoirahon
  2. Inferring Cognitive Heterogeneity from Aggregate Choices By Valentino Dardanoni; Paola Manzini; Marco Mariotti; Christopher J. Tyson
  3. Using Response Times to Measure Strategic Complexity and the Value of Thinking in Games By Gill, David; Prowse, Victoria L.

  1. By: Odilova, Shoirahon
    Abstract: The aim of this research note is to explore the correlation between cognitive abilities and software piracy rates in a sample of more than 100 nations. The results reported in this paper suggest that cognitive capital has significant and negative effect on software piracy rates. Moreover, the effect of democracy on software piracy is stronger in high-IQ societies.
    Keywords: cognitive abilities, software piracy, democracy
    JEL: F0
    Date: 2017
  2. By: Valentino Dardanoni (Universita' degli Studi di Palermo); Paola Manzini (University of St Andrews and IZA); Marco Mariotti (Queen Mary University of London); Christopher J. Tyson (Queen Mary University of London)
    Abstract: We study the problem of recovering the distribution of cognitive characteristics in a popula- tion of boundedly rational agents from the aggregate choices they make from a fixed menu of alternatives. Two models of limited attention are examined from this point of view, and it is shown that both “consideration probability” and “consideration capacity” distributions are substantially identified by aggregate choice shares. These models are applied to data on over-the-counter painkiller sales, yielding concurrent estimates that on average two or three out of the eight available products are considered in this market.
    Keywords: attention, bounded rationality, revealed preference, stochastic choice
    JEL: D01 D03 D12
    Date: 2017–02–13
  3. By: Gill, David (Purdue University); Prowse, Victoria L. (Purdue University)
    Abstract: Response times are a simple low-cost indicator of the process of reasoning in strategic games (Rubinstein, 2007; Rubinstein, 2016). We leverage the dynamic nature of response-time data from repeated strategic interactions to measure the strategic complexity of a situation by how long people think on average when they face that situation (where we define situations according to the characteristics of play in the previous round). We find that strategic complexity varies significantly across situations, and we find considerable heterogeneity in how responsive subjects' thinking times are to complexity. We also study how variation in response times at the individual level across rounds affects strategic behavior and success. We find that 'overthinking' is detrimental to performance: when a subject thinks for longer than she would normally do in a particular situation, she wins less frequently and earns less. The behavioral mechanism that drives the reduction in performance is a tendency to move away from Nash equilibrium behavior.
    Keywords: response time, decision time, thinking time, strategic complexity, game theory, strategic games, repeated games, beauty contest, cognitive ability, personality
    JEL: C72 C91
    Date: 2017–01

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