nep-neu New Economics Papers
on Neuroeconomics
Issue of 2017‒11‒26
four papers chosen by

  1. Reasoning about Others’ Reasoning By Larbi Alaoui; Antonio Penta
  2. Effectuation and/or Causation: What Cognitive Logic One Should Foster in Different Institutional Settings? By Shirokova, Galina V.; Laskovaia, Anastasiia; Osiyevskyy, Oleksiy
  3. Temptation and Commitment in the Laboratory By Daniel Houser; Daniel Schunk; Joachim Winter; Erte Xiao

  1. By: Larbi Alaoui; Antonio Penta
    Abstract: Recent experiments suggest that level-k behavior is often driven by subjects' beliefs, rather than their binding cognitive bounds. But the extent to which this is true in general is not completely understood, mainly because disentangling 'cognitive' and 'behavioral' levels is challenging experimentally and theoretically. In this paper we provide a simple experimental design strategy (the 'tutorial method') to disentangle the two concepts purely based on subjects' choices. We also provide a 'replacement method' to assess whether the increased sophistication observed when stakes are higher is due to an increase in subjects' own understanding or their beliefs over others' increased incentives to reason. We find evidence that, in some of our treatments, the cognitive bound is indeed binding for a large fraction of subjects. Furthermore, a significant fraction of subjects do take into account others' incentives to reason. Our findings also suggest that in general, level-k behavior should not be taken as driven either by cognitive limits alone or beliefs alone. Rather, there is an interaction between own cognitive bound and reasoning about the opponent's reasoning process. From a methodological viewpoint, the tutorial and replacement methods have broader applicability, and can be used to study the beliefs-cognition dichotomy and higher order beliefs e ects in non level-k settings as well.
    Keywords: cognitive bound, depth of reasoning, higher-order beliefs. level-k reasoning, replacement method, tutorial method
    JEL: C72 C92 D80
    Date: 2017–11
  2. By: Shirokova, Galina V.; Laskovaia, Anastasiia; Osiyevskyy, Oleksiy
    Abstract: Strategic management and entrepreneurship literature pay substantive attention to rational decision-making processes. Despite the advantages of planning-based logic, some scholars prefer alternative approaches to making decisions. In entrepreneurship, effectuation theory rose to prominence as an alternative to planning reasoning. With this paper, we intend to reach a new level in effectuation research by examining macro-level factors that may influence the efficiency of entrepreneurial cognitive processes. Particularly, we investigate how formal institutions shape the relationship between student entrepreneursÙ venture cognitive logic and performance of their ventures. We found this relationship is shaped by the characteristics of the country-level institutional environment.
    Keywords: effectuation, causation, GUESSS, decision-making processes, entrepreneurship, formal institutions,
    Date: 2016
  3. By: Daniel Houser (George Mason University); Daniel Schunk (Johannes Gutenberg-University Mainz, Germany); Joachim Winter (Ludwig-Maximilians-Universität München); Erte Xiao (Monash University, Australia)
    Abstract: We report data from a novel laboratory experiment on economic decisions under persistent temptations. This type of temptation is ubiquitous, as it refers to any temptation that is present until one either gives in or makes a costly commitment decision to have it removed. Subjects in our experiment are repeatedly offered an option with instantaneous benefit that also entails a substantial reduction to overall earnings. We show that this option is tempting in the sense that a substantial fraction of our subjects incur pecuniary costs to eliminate the choice, and thus commit not to choose this alternative. We find that commitment and giving in to temptation generally occur at the first opportunity, though a non-negligible fraction of subjects delay either making the commitment decision or giving in to temptation. This delay is consistent with the costs of self-control increasing with its use.
    Keywords: self-control; willpower; temptation; commitment; laboratory experiment
    JEL: D11 C91
    Date: 2017–11
  4. By: Çi?dem Kaya (Istanbul Arel University); Göksel Ataman (Marmara University); Birsen Yener Ayd?n (Department of Management and Organization, Marmara University, Istanbul)
    Abstract: This study investigates the relationship between workplace ostracism and work engagement of the employees in the local governments and whether neuroticism, one of the personality traits, has a role on this relationship. Convenience sampling was used and data were obtained from a sample of 369 employees from two municipalities. The results show that there is a negative relationship between workplace ostracism and work engagement. Moreover, neuroticism moderates the negative relationship between workplace ostracism and work engagement. Overall, the results show that work engagement decreases as workplace ostracism increases, and highly neurotic employees are more negatively affected by workplace ostracism. Local governments may utilize the results in their efforts to create an environment fostering work engagement. Leaders may apply the study outcomes about the role of employee personality and workplace ostracism to improve their service performance.
    Keywords: Workplace ostracism, Work engagement, Neuroticism, Local governments
    JEL: M10 M12 M19
    Date: 2017–10

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