nep-neu New Economics Papers
on Neuroeconomics
Issue of 2017‒11‒12
four papers chosen by

  1. Does Exposure to Unawareness Affect Risk Preferences? A Preliminary Result By Wenjun Ma; Burkhard Schipper
  2. Impacts of Late School Entry on Children's Cognitive Development in Rural Northwestern China—Does Preprimary Education Matter? By Qihui Chen
  4. Field experiments on the development of time preferences By James Andreoni; Michael Kuhn; John List; Anya Samek; Charles Sprenger

  1. By: Wenjun Ma; Burkhard Schipper (Department of Economics, University of California Davis)
    Abstract: One fundamental assumption often made in the literature on unawareness is that risk preferences are invariant to changes of awareness. We study how exposure to unawareness affects choices under risk. Participants in our experiment choose repeatedly between varying sure outcomes and a lottery in 3 phases. All treatments are exactly identical in phase 1 and phase 3, but differ in phase 2. There are five different treatments pertaining to the lottery faced in phase 2: The control treatment (i.e., a standard lottery), the treatment with awareness of unawareness of lottery outcomes but known number of outcomes, the treatment with awareness of unawareness of outcomes but with unknown number of outcomes, the treatment with unawareness of unawareness of some outcomes, and the treatment with an ambiguous lottery. We study both whether behavior differs in phase 3 across treatments (between subjects effect) and whether differences of subjects' behavior between phases 1 and phase 3 differs across treatments (within subject effects). We observe no significant treatment effects.
    Keywords: Unawareness, Awareness of unawareness, Risk aversion, Experiments
    JEL: C91 C92 D81 D87
    Date: 2017–05–02
  2. By: Qihui Chen
    Abstract: This article estimates the causal effect of primary school entry age on children's cognitive development in rural northwestern China, using data on nearly 1,800 primary school aged children from the Gansu Survey of Children and Families. Instrumental variable estimates, exploiting the discontinuity structure in children's school entry age around the enrolment cut-off date, indicate that a 1-year delay in school entry reduces children's scores on a cognitive ability test administered when they were aged 9–12 by 0.11–0.16 standard deviations (of the distribution of test scores). The negative late-school-entry effect is significantly larger in villages with no preprimary schools. It also persists as children advance to higher grades. These findings suggest that delayed school entry, even if it may be rural parents' rational response to resource constraints, can be harmful for children's cognitive development in developing areas with underdeveloped preprimary school systems.
    Keywords: school entry age, cognitive development, preprimary school, rural China
  3. By: Maryna Tverdostup, Tiiu Paas
    Abstract: This paper analyses the immigrant-native wage gap and incorporates cognitive skills to approximate an individual human capital profile. Based on data from the Programme for the International Assessment of Adult Competencies (PIAAC) for 15 European countries, we document that on average foreign-born respondents achieve substantially worse scores in literacy and numeracy test domain, and the observed gap in cognitive skill declines over the period of the host-country stay. The results of the analysis show that once we account additionally skill use at work in wage regressions, along with actual skill level, no statistically significant gap in earnings across immigrants and natives remains. These findings indicate that, despite similar cognitive skill levels and background traits, immigrants and natives may apply their skills at work to different extents, yielding a difference in their wage returns. Therefore, disparity in skill use at work plays an important role in explaining the immigrant-native wage gap. This leads us to conclude that immigrants are not yet sufficiently well integrated in European labour markets, and the potential for the development and application of their human capital is still underutilised. Further policy measures should profoundly consider these indications, taking into account that the role of immigrants and their labour supply is increasing remarkably in European societies.
    Keywords: migration, human capital, cognitive skills, PIAAC
    JEL: J15 J24 J31 J61
    Date: 2017
  4. By: James Andreoni; Michael Kuhn; John List; Anya Samek; Charles Sprenger
    Abstract: Time preferences have been correlated with a range of life outcomes, yet little is known about their early development. We conduct a field experiment to elicit time preferences of nearly 1,000 children ages 3-12, who make several inter temporal decisions. To shed light on how such primitives form, we explore various channels that might affect time preferences, from background characteristics to the causal impact of an early schooling program that we developed and operated. Our results suggest that time preferences evolve substantially during this period with younger children displaying more impatience than older children. We also find a strong association with race: black children, relative to white or Hispanic children, are more impatient. Interestingly, parents of black children are also much more impatient than parents of white and Hispanic children. Finally, assignment to different schooling opportunities is not significantly associated with child time preferences.
    Date: 2017

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