nep-neu New Economics Papers
on Neuroeconomics
Issue of 2018‒08‒13
five papers chosen by

  1. The Long-Lasting Effects of Family and Childhood on Adult Wellbeing: Evidence from British Cohort Data By Sarah Flèche; Warn Lekfuangfu; Andrew E. Clark
  2. Locus of control and its intergenerational implications forearly childhood skill formation By Lekfuangfu, Warn N; Powdthavee, Nattavudh; Warrinnier, Nele; Cornaglia, Francesca
  3. Cognitive sophistication and deliberation times By Carlos Alós-Ferrer; Johannes Buckenmaier
  4. Temperature and High-Stakes Cognitive Performance: Evidence from the National College Entrance Examination in China By Joshua S. Graff Zivin; Yingquan Song; Qu Tang; Peng Zhang
  5. Does response time predict withdrawal decisions? Lessons from a bank-run experiment By Hubert Janos Kiss; Ismael Rodriguez-Lara; Alfonso Rosa-Garcia

  1. By: Sarah Flèche (Centre for Economic Performance - LSE - London School of Economics and Political Science); Warn Lekfuangfu (LSE - London School of Economics and Political Science, Chulalongkorn University (THAILAND) - Chulalongkorn University (THAILAND)); Andrew E. Clark (Centre for Economic Performance - LSE - London School of Economics and Political Science, LSE - London School of Economics and Political Science, PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: To what extent do childhood experiences continue to affect adult wellbeing over the life course? Previous work on this link has been carried out either at one particular adult age or for some average of adulthood. We here use two British birth-cohort datasets (the 1958 NCDS and the 1970 BCS) to map out the time profile of the effect of childhood on adult outcomes, including life satisfaction. We find that the effect of many aspects of childhood do not fade away over time, but are rather remarkably stable. In both birth cohorts child non-cognitive skills are the strongest predictors of adult life satisfaction at all ages. Of these, emotional health is the strongest. Childhood cognitive performance is more important than good conduct in explaining adult life satisfaction in the earlier cohort, whereas this ranking is inverted in the more recent BCS.
    Keywords: life satisfaction,cohort data,childhood,adult outcomes
    Date: 2017–07
  2. By: Lekfuangfu, Warn N; Powdthavee, Nattavudh; Warrinnier, Nele; Cornaglia, Francesca
    Abstract: This paper builds upon Cunha’s (2015) subjective rationality model in which parents have a subjective belief about the impact of their investment on the early skill formation of their children. We propose that this subjective belief is determined in part by locus of control (LOC), i.e., the extent to which individuals believe that their actions can influence future outcomes. Consistent with the theory, we show that maternal LOC measured at the 12th week of gestation strongly predicts maternal attitudes towards parenting style, maternal time investments, as well as early and late cognitive outcomes. We also utilize the variation in inputs and outputs by maternal LOC to help improve the specification typically used in the estimation of skill production function parameters.
    Keywords: locus of control; parental investment; human capital accumulation; early skill formation; ALSPAC
    JEL: I31 J01
    Date: 2017–04–27
  3. By: Carlos Alós-Ferrer; Johannes Buckenmaier
    Abstract: Behavioral heterogeneity arising from cognitive differences among economic agents plays a fundamental role in the economy. To explain this heterogeneity, models of iterative thinking assume that certain choices indicate higher cognitive effort. That is, choices are used to infer the cognitive process behind the choices themselves. To establish this link choice data is insufficient, thus an individually-measurable correlate of cognitive effort is required. We argue that deliberation times provide this missing link. We present a simple model of heterogeneous cognitive depth, incorporating stylized facts from the psychophysical literature, which makes predictions on the relation between choices, cognitive effort, incentives, and deliberation times. In an experimental test, the predicted relations are readily observed in the data, but only when the features leading to iterative thinking are salient enough. Hence, the predicted relations become a tool to uncover the limits of models of iterative thinking.
    Keywords: Heterogeneity, level-k reasoning, cognitive sophistication, deliberation times, depth of reasoning, cognitive effort
    JEL: C72 C91 D80 D91
    Date: 2018–07
  4. By: Joshua S. Graff Zivin; Yingquan Song; Qu Tang; Peng Zhang
    Abstract: We provide the first nation-wide estimates on temperature effects on high-stakes cognitive performance in a developing country using data from the National College Entrance Examination (NCEE) in China. The NCEE is one of the most important institutions in China and affects hundreds of millions of families. We find that a one-standard-deviation increase in temperature (3.29° C) decreases the total test score by 1.12% (9.62% of a standard deviation) and decreases the probability of getting into first-tier universities by 1.97% (4.38% of a standard deviation). This suggests that temperature plays an important role in high-stakes cognitive performance and has potentially far-reaching impacts for the careers and lifetime earnings of students.
    JEL: I23 I24 Q54
    Date: 2018–07
  5. By: Hubert Janos Kiss (Research fellow in the Momentum (LD-004/2010) Game Theory Research Group, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences Department of Economics, Eötvös Loránd University, Budapest, Hungary.); Ismael Rodriguez-Lara (Department of Economics, Middlesex University London, UK); Alfonso Rosa-Garcia (Facultad de Ciencias Jurídicas y de la Empresa, Universidad Católica San Antonio, Murcia, Spain)
    Abstract: We study how response time in a laboratory experiment on bank runs affects withdrawal decisions. In our setup, the bank has no fundamental problems, depositors decide equentially (if to keep the money in the bank or to withdraw) and may observe previous decisions depending on the information structure. We consider two levels of difficulty of decisionmaking conditional on the presence of strategic dominance and strategic uncertainty. We posit that i) decisions in information sets characterized by the lack of strategic dominance are more difficult than in those with strategic dominance; ii) in the latter group, decisions are more difficult when there is strategic uncertainty. We investigate how response time associates with the difficulty and optimality of withdrawal decision. We hypothesize that a) the more difficult the decision, the longer the response time; b) the predictive power of response time depends on difficulty. We find that response time is longer in information sets with strategic uncertainty compared to those without (as expected), but we do not find such relationship when considering strategic dominance (contrary to our hypothesis). Response time correlates negatively with optimal decisions in information sets with a dominant strategy (contrary to our expectation) and also when decisions are obvious in the absence of strategic uncertainty (in line with our hypothesis). When there is strategic uncertainty, we find suggestive evidence that response time predicts optimal decisions. Thus, freezing deposits for some time may be beneficial and help to avoid massive withdrawals as it engthens response times.
    Keywords: bank run, cognitive abilities, coordination games, dominant strategy, experiment, response time, sequential rationality, strategic uncertainty
    JEL: C72 C91 D80 G21
    Date: 2018–05

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