nep-neu New Economics Papers
on Neuroeconomics
Issue of 2018‒09‒10
three papers chosen by

  1. Cognitive and non-cognitive skills, hiring channels, and wages in Bangladesh By Anne Hilger; Christophe Jalil Nordman; Leopold R. Sarr
  2. Effects of Poverty on Impatience: Preferences or Inattention? By Vojtech Bartos; Michal Bauer; Julie Chytilova; Ian Levely
  3. The Effect of Positive Mood on Cooperation in Repeated Interaction By Proto, Eugenio; Sgroi, Daniel; Nazneen, Mahnaz

  1. By: Anne Hilger (Paris School of Economics, IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa, IFP (Pondicherry, India)); Christophe Jalil Nordman (IRD, UMR 225 DIAL, PSL, Université Paris Dauphine, LEDa, IFP (Pondicherry, India)); Leopold R. Sarr (The World Bank)
    Abstract: This paper uses a novel matched employer-employee data set representing the formal sector in Bangladesh to provide descriptive evidence of both the relative importance of cognitive and non-cognitive skills in this part of the labor market and the interplay between skills and hiring channels in determining wages. While cognitive skills (literacy, a learning outcome) a ect wages only by enabling workers to use formal hiring channels, they have no additional wage return. Non-cognitive skills, on the other hand, do not a ect hiring channels, but they do enjoy a positive wage return. This wage return di ers by hiring channel: those hired through formal channels bene t from higher returns to openness to experience, but lower returns to conscientiousness and hostile attribution bias. Those hired through networks enjoy higher wages for higher levels of emotional stability, but they are also punished for higher hostile attribution bias. This is in line with di erent occupational levels being hired predominantly through one channel or the other. We provide suggestive evidence that employers might use hiring channels di erently, depending on what skill they deem important: employers valuing communication skills, a skill that could arguably be observed during selection interviews, are associated with a larger within- rm wage gap between formal and network hires, while the importance of teamwork, a skill that is more dicult to observe at the hiring stage, is associated with a smaller wage gap.
    Keywords: cognitive skills, personality traits, networks, matched worker- rm data, Bangladesh
    JEL: J24 J31 J71 O12
    Date: 2018–05
  2. By: Vojtech Bartos; Michal Bauer; Julie Chytilova; Ian Levely
    Abstract: We study two psychological channels how poverty may increase impatient behavior – an effect on time preference and reduced attention. We measured discount rates among Ugandan farmers who made decisions about when to enjoy entertainment instead of working. We find that experimentally induced thoughts about poverty-related problems increase the preference to consume entertainment early and delay work. The effect is equivalent to a 27 p.p. increase in the intertemporal rate of substitution. Using monitoring tools similar to eye tracking, a novel feature for this subject pool, we show this effect is not due to a lower ability to sustain attention.
    Keywords: poverty; scarcity; time discounting; preferences; inattention; decision-making process;
    Date: 2018–08
  3. By: Proto, Eugenio; Sgroi, Daniel; Nazneen, Mahnaz
    Abstract: Existing research supports two opposing mechanisms through which positive mood might affect cooperation. Some studies have suggested that positive mood produces more altruistic, open and helpful behavior, fostering cooperation. However, there is contrasting research supporting the idea that positive mood produces more assertiveness and inward-orientation and reduced use of information, hampering cooperation. We find evidence that suggests the second hypothesis dominates when playing the repeated Prisoner’s Dilemma. Players in an induced positive mood tend to cooperate less than players in a neutral mood setting. This holds regardless of uncertainty surrounding the number of repetitions or whether pre-play communication has taken place. This finding is consistent with a text analysis of the pre-play communication between players indicating that subjects in a more positive mood use more inward-oriented, more negative and less positive language. To the best of our knowledge we are the first to use text analysis in pre-play communication.
    Keywords: Financial Economics
    Date: 2017–11–11

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.