nep-neu New Economics Papers
on Neuroeconomics
Issue of 2017‒09‒10
four papers chosen by
Daniel Houser
George Mason University

  1. Economic rationality under cognitive load By Drichoutis, Andreas C.; Nayga, Rodolfo
  2. Stress induces contextual blindness in lotteries and coordination games By Brocas, Isabelle; Carrillo, Juan D; Kendall, Ryan
  3. Deliberation favours social efficiency by making people disregard their relative shares: Evidence from US and India By Valerio Capraro; Brice Corgnet; Antonio M. Espin; Roberto Hernán-Gonzalez
  4. Brand Attachment and Brand Loyalty: The Moderating Role of Nostalgic Connections By Zineb Rhajbal; Mustapha Khouilid; Layla Saligane; Abdellatif Chakor

  1. By: Drichoutis, Andreas C.; Nayga, Rodolfo
    Abstract: Economic analysis assumes that consumer behavior can be rationalized by a utility function. Previous research has shown that some decision-making quality can be captured by permanent cognitive ability but has not examined how a temporary load in subjects' working memory can affect economic rationality. In a controlled laboratory experiment, we exogenously vary cognitive load by asking subjects to memorize a number while they undertake an induced budget allocation task (Choi et al., 2007a,b). Using a number of manipulation checks, we verify that cognitive load has adverse affects on subjects' performance in reasoning tasks. However, we find no effect in any of the goodness-of-fit measures that measure consistency of subjects' choices with the Generalized Axiom of Revealed Preferences (GARP), despite having a sample size large enough to detect even small differences between treatments with 80% power. Our finding suggests that researchers need not worry about economic rationality breaking down when subjects are placed under temporary working memory load.
    Keywords: Cognitive load, rationality, revealed preferences, working memory, response times, laboratory experiment
    JEL: C91 D03 D11 D12 G11
    Date: 2017–08–20
  2. By: Brocas, Isabelle; Carrillo, Juan D; Kendall, Ryan
    Abstract: In this paper, we study how stress affects risk taking in three tasks: individual lotteries, Stag Hunt (coordination) games and Hawk-Dove (anti-coordination) games. Both control and stressed subjects take more risks in all three tasks when the value of the safe option is decreased and in lotteries when the expected gain is increased. Also, subjects take longer to take decisions when stakes are high, when the safe option is less attractive and in the conceptually more difficult Hawk-Dove game. Stress (weakly) increases reaction times in those cases. Finally, our main result is that the behavior of stressed subjects in lotteries, Stag Hunt and Hawk-Dove are all highly predictive of each other (p-value
    Date: 2017–08
  3. By: Valerio Capraro (CWI - Center for Mathematics and Computer Science - Netherlands Organisation for Scientific Research); Brice Corgnet (EMLYON Business school - EMLYON Business School, GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - UJM - Université Jean Monnet [Saint-Etienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Antonio M. Espin (Middlesex University Business School - Middlesex University Business School); Roberto Hernán-Gonzalez (Nottingham University Business School - UON - University of Nottingham, UK)
    Abstract: Groups make decisions on both the production and the distribution of resources. These decisions typically involve a tension between increasing the total level of group resources (i.e. social efficiency) and distributing these resources among group members (i.e. individuals’ relative shares). This is the case because the redistribution process may destroy part of the resources, thus resulting in socially inefficient allocations. Here we apply a dual-process approach to understand the cognitive underpinnings of this fundamental tension. We conducted a set of experiments to examine the extent to which different allocation decisions respond to intuition or deliberation. In a newly developed approach, we assess intuition and deliberation at both the trait level (using the Cognitive Reflection Test, henceforth CRT) and the state level (through the experimental manipulation of response times). To test for robustness, experiments were conducted in two countries: the USA and India. Despite absolute-level differences across countries, in both locations we show that: (i) time pressure and low CRT scores are associated with individuals’ concerns for their relative shares and (ii) time delay and high CRT scores are associated with individuals’ concerns for social efficiency. These findings demonstrate that deliberation favours social efficiency by overriding individuals’ intuitive tendency to focus on relative shares.
    Keywords: efficiency, dual process models, equality, intuition, deliberation
    Date: 2017
  4. By: Zineb Rhajbal (Faculté des Sciences Juridiques, Economiques et Sociales - Université Mohamed V - Souissi); Mustapha Khouilid (Faculté des Sciences Juridiques, Economiques et Sociales - Université Mohamed V - Souissi); Layla Saligane (Faculté des Sciences Juridiques, Economiques et Sociales - Université Mohamed V - Souissi); Abdellatif Chakor (Faculté des Sciences Juridiques, Economiques et Sociales - Université Mohamed V - Souissi)
    Abstract: The development of the client portfolio has become at the heart of the business policies of companies. Managers are increasingly paying attention to their brand strategies and are focusing on strengthening the brand-consumer relationship. The objective of this paper is to study the relationship between the dimensions of brand attachment and the dimensions of fidelity while analysing the moderating role of nostalgic connections on this relationship. An empirical study was carried out on an accidental sample of 210 people. The results of structural modelling relate the positive and significant impact of addictive attachment on attitudinal and behavioural fidelity, while the attachment of friendship has a negative impact on both dimensions of loyalty. The moderating role of nostalgic connections has been rejected because of the inconsistency between the desire to recall a period of life or a person with the quality (happy or unhappy) of the period in question.
    Keywords: friendship attachment,nostalgic connections,Addictive attachment,attitudinal fidelity,behavioural fidelity
    Date: 2017

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