nep-neu New Economics Papers
on Neuroeconomics
Issue of 2018‒05‒14
three papers chosen by
Daniel Houser
George Mason University

  1. Gender Gap in educational investment and outcome in Japan: Empirical Findings from Japan Child Panel Survey By Hideo Akabayashi; Kayo Nozaki; Shiho Yukawa
  2. Tail and Center Rounding of Probabilistic Expectations in the Health and Retirement Study By Pamela Giustinelli; Charles F. Manski; Francesca Molinari
  3. Cognitive stress and learning Economic Order Quantity (EOQ) inventory management: An experimental investigation By Pan, Jinrui; Shachat, Jason; Wei, Sijia

  1. By: Hideo Akabayashi (Faculty of Economics, Keio University); Kayo Nozaki (Faculty of Humanities and Social Sciences, Kochi University); Shiho Yukawa (Faculty of Economics, Teikyo University)
    Abstract: Recent research suggests that family background such as parental education and poverty may have different influences on children by gender of the child. In developed countries, the gender gap in the proportion majoring in science and mathematics (STEM) does not necessarily shrink as the overall gender disparity narrows in educational achievement. There are, however, few studies on the specific roles of household background, particularly the difference in investment behavior of money and time, and the role of interaction between cognitive ability and non-cognitive ability. In this paper, using the Japan Child Panel Survey, we first examine the gender differences in the test scores of mathematics and language, preference for these subjects, and educational investment from parents. Next, we analyzed whether the family environment has different effects on these variables for each gender. Our main results are follows. Firstly, we did not find statistically significant gender differences in the average score of mathematical test scores and ratio of top 10% students. Compared to boys, girls did not show statistically significant differences in preferences for mathematics, but did showed statistically significant preferences for languages. Secondly, the income elasticity of expenditure on after school activities were larger to girls, especially of expenditure on artistic lessons.
    Keywords: Education, Academic outcome, Panel Data, Gender gap, STEM
    JEL: I20 I24 J16
    Date: 2018–03–28
  2. By: Pamela Giustinelli; Charles F. Manski; Francesca Molinari
    Abstract: A growing number of surveys elicit respondents’ expectations for future events on a 0-100 scale of percent chance. These data reveal substantial heaping at multiples of 10 and 5 percent, suggesting that respondents round their reports. This paper studies the nature of rounding by analyzing response patterns across expectations questions and waves of the Health and Retirement Study. We discover a tendency by about half of the respondents to provide more refined responses in the tails of the scale than the center. Only about five percent provide more refined responses in the center than the tails. We find that rounding varies across question domains, which range from personal health to personal finances to macroeconomic events. We develop a two-stage framework to characterize person-specific rounding. The first stage uses observed responses to infer respondents’ rounding practice in each question domain and scale segment. The second stage replaces each original point response with an interval, representing the range of possible values of the respondent’s true latent belief implied by the degree of rounding inferred in the first stage. We study how the inferred rounding types in the first stage vary with respondent characteristics, including age and cognitive abilities.
    JEL: C81 D1 D84 I12 J14
    Date: 2018–04
  3. By: Pan, Jinrui; Shachat, Jason; Wei, Sijia
    Abstract: We use laboratory experiments to evaluate the effects of cognitive stress on inventory management decisions in a finite horizon Economic Order Quantity (EOQ) model. We manipulate two sources of cognitive stress. First, we vary participants' ability to order inventory from any decision period to only when inventory is depleted. This reduces cognitive stress by restricting the policy choice set. Second we vary participants' participation in a competing pin memorization. This increases cognitive load. Participants complete a sequence of five ``annual'' inventory management tasks, with monthly ordering decisions. Both sources of cognitive stress negatively impact earnings, with the bulk of these impacts occurring in the first year. Participants' choices in all treatments exhibit trends to near optimal policy adoption. But only in the most favorable treatment do the majority of choices reach the optimal policy. We estimate the learning dynamics of monthly order decisions using a Markov switching model. Estimates suggest increased cognitive load reduces the probability of switching to more profitable policies, and that more complex policy choice sets leads to a greater policy lock-in. Our results suggests that inexperienced individuals will perform more poorly when called upon to make inventory management situations in cognitively stressfully environments, and that the benefits of providing support and task simplicity is greatest when the task is first assigned.
    Keywords: Economic Order Quantity, Cognitive load, Choice set complexity, Learning
    JEL: C92 D83 M11
    Date: 2018–04–15

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