nep-neu New Economics Papers
on Neuroeconomics
Issue of 2019‒02‒04
four papers chosen by

  1. Locus of Control and Consistent Investment Choices By Pia Pinger; Sebastian Schäfer; Heiner Schumacher
  2. The Formation of Prosociality: Causal Evidence on the Role of Social Environment By Fabian Kosse; Thomas Deckers; Pia Pinger; Hannah Schildberg-Hörisch; Armin Falk
  3. Revisiting a remedy against the chain of unkindness By Wendelin Schneder; Nina Lucia Stephan
  4. Under Pressure? Assessing the Roles of Skills and Other Personal Resources for Work-Life Strains By Blunch, Niels-Hugo; Ribar, David C.; Western, Mark

  1. By: Pia Pinger; Sebastian Schäfer; Heiner Schumacher
    Abstract: We document that an internal locus of control can be hindering in financial mar- ket situations, where short-term outcomes are determined by chance. The reason is that internally controlled individuals may tend to (over-)react to random out- comes. Our evidence is based on an experiment in which subjects repeatedly invest in two identical, uncorrelated, risky assets and observe previous outcome realiza- tions. Under mild restrictions, the optimal strategy is to make the same choice in each period. Yet, internals are more likely to make inconsistent risk choices. The effect size of locus of control is comparable with that of cognitive ability. Among inconsistent subjects, average switching behavior is in line with the gambler’s fal- lacy. However, choices of very internally controlled individuals tend to correspond to the hot hand fallacy.
    Keywords: Locus of Control, Risk Preferences, Investment Decisions, Cognitive Ability
    JEL: D03 G02 C91
    Date: 2018–05
  2. By: Fabian Kosse; Thomas Deckers; Pia Pinger; Hannah Schildberg-Hörisch; Armin Falk
    Abstract: This study presents descriptive and causal evidence on the role of social environment for the formation of prosociality. In a first step, we show that socioeconomic status (SES) as well as the intensity of mother-child interaction and mothers' prosocial attitudes are systematically related to elementary school children's prosociality. In a second step, we present evidence on a randomlyassigned variation of the social environment, providing children with a mentor for the duration of one year. Our data include a two-year follow-up and reveal a significant and persistent increase in prosociality in the treatment relative to the control group. Moreover, enriching the social environment bears the potential to close the observed gap in prosociality between low and high SES children. A mediation analysis of the observed treatment effect suggests that prosociality develops in response to stimuli in the form of prosocial role models and intense social interactions.
    Keywords: Formation of preferences, prosociality, social preferences, trust, social inequality
    JEL: D64 C90
    Date: 2018–05
  3. By: Wendelin Schneder (University of Paderborn); Nina Lucia Stephan (University of Paderborn)
    Abstract: Previous experimental studies show that subjects who receive little in a dictator game, pass on less to a third person when they become dictators themselves. However, when subjects can write a letter to their dictator, they act more kindly. The prevailing explanation for this phenomenon is that letter writing helps them to emotionally ‘close the case’. Alternatively, being asked to write a letter may be seen as a signal that something is wrong with the dictator’s behavior and lead to less imitation of this behavior. We examine whether letter writing also helps to increase kindness when the second explanation is excluded by design. In our experiment, subjects face choices in different domains, so that imitation is not possible. Instead of deciding how to split money, the first decision consists in assigning an annoying work task (the unkind option) instead of an enjoyable one. We find that letter writing nevertheless increases giving in a subsequent dictator game, confirming the validity of letter writing as a remedy against the chain of unkindness.
    Keywords: experimental economics, chain of unkindness, emotional closure, cooling down
    JEL: D91 C91 D03
    Date: 2018–10
  4. By: Blunch, Niels-Hugo (Washington and Lee University); Ribar, David C. (University of Melbourne); Western, Mark (University of Queensland)
    Abstract: Many working parents struggle to balance the demands of their jobs and family roles. Although we might expect that additional resources would ease work-family constraints, theory and evidence regarding resources have been equivocal. This study uses data on working mothers and fathers – as well as their cohabiting partners/spouses – from the Household, Income, and Labour Dynamics in Australia survey to investigate how personal resources in the form of skills, cognitive abilities, and personality traits affect work-life strains. It considers these along with standard measures of economic, social, and personal resources, and estimates seemingly unrelated regression (SUR) models of work-life strains for employed mothers and fathers that account for correlations of the couple's unobserved characteristics. The SUR estimates indicate that computer skills reduce work-life strains for mothers, that math skills reduce strains for fathers, and that the personality traits of extraversion, conscientiousness, and emotional stability reduce strains for both parents. However, the estimates also indicate that better performance on a symbol look-up task, which tests attention, visual scanning acuity, and motor speed, increases fathers' work-life strains.
    Keywords: work-family strains and gains, cognitive abilities, skills, household resources, Australia, HILDA survey
    JEL: I1 I31 J24 J81
    Date: 2018–12

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