nep-neu New Economics Papers
on Neuroeconomics
Issue of 2018‒06‒18
three papers chosen by

  1. Electrophysiological Precursor of Information Cascade: Evidence from N200 By Li, Jianbiao; Niu, Xiaofei; Zhu, Chengkang; Wang, Guangrong; Yu, Rongjun; Cao, Qian; Li, Shuaiqi; Liu, Xiaoli; Wang, Pengcheng
  2. Parental Beliefs about Returns to Different Types of Investments in School Children By Orazio Attanasio; Teodora Boneva; Christopher Rauh
  3. Environmental Bottlenecks on Children’s Genetic Potential for Adult Socioeconomic Attainments: Evidence from a Health Shock By Jason Fletcher

  1. By: Li, Jianbiao; Niu, Xiaofei; Zhu, Chengkang; Wang, Guangrong; Yu, Rongjun; Cao, Qian; Li, Shuaiqi; Liu, Xiaoli; Wang, Pengcheng
    Abstract: When a sequence of decision makers with private information announce public predictions, initial conformity can create an information cascade in which all future decision makers will rationally match the early announcements and disregard private information. This study uses event-related potentials (ERPs) to compare the time course of neural activities associated with information cascade during sequential decision-making. In our experiment, a participant receives a private signal matched with public information in the congruent condition, while in the incongruent condition he or she receives a private signal against the public information. The results show that the conflict between private and public information triggers a more negative deflection peaking around 300 ms, with a right frontal scalp distribution similar to N200. Importantly, the N200 effect is negatively correlated with information cascade. These results add to the growing literature on neuronal mechanisms of information cascades by disentangling cognitive control related processes in inhibiting overweighting private information and the neural signal of a cascade in sequential decision-making.
    Keywords: information cascade,N200,cognitive control,ERPs
    Date: 2018
  2. By: Orazio Attanasio (University College London); Teodora Boneva (University of Cambridge); Christopher Rauh (University of Cambridge, INET Institute)
    Abstract: In this paper, we study parental beliefs about the returns to different types of investments in school children. Using a representative sample of 1,962 parents in England, we document how parents perceive the returns to parental time investments, material investments and school quality, as well as the complementarity/substitutability between the different inputs. Both parental investments and school quality are perceived to be important and returns are perceived to be diminishing with higher investments. We further find that parental material investments are perceived as more productive if the child attends a high quality school. We find no differences in perceived returns to investments by the child’s initial human capital or gender and, surprisingly, by the parents’ socioeconomic background. We document a high degree of heterogeneity in perceived returns across respondents and document that perceived returns are highly correlated with actual investment decisions made by parents.
    Keywords: parental investments, human capital, beliefs, Inequality
    JEL: I24 J13 J24 J62
    Date: 2018–05
  3. By: Jason Fletcher (University of Wisconsin–Madison)
    Abstract: This paper explores gene-environmental interactions between family environments and children’s genetic scores in determining educational attainment. The central question is whether poor childhood family environments reduce the ability for children to leverage their genetic gifts to achieve high levels of educational attainments. The multigenerational information and genetic data contained in the Health and Retirement Study is used to separate two mechanisms of intergenerational transmission of socioeconomic status – genetic endowments and family environments. Using parental in utero exposure to the 1918/1919 influenza pandemic as a source of quasi-experimental variation to family environments (but not affecting children’s genetic endowments), this paper estimates interactions between parental investments and children’s genetic potential. The main finding suggests that girls with high genetic potential whose fathers were exposed to influenza face reduced educational attainments – a gene-environment interaction – but there is no similar effect for boys.
    Keywords: in utero exposure, gene-environment interactions, polygenic scores, intergenerational effects
    JEL: J62 J10 J24
    Date: 2018–06

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