nep-neu New Economics Papers
on Neuroeconomics
Issue of 2020‒04‒06
four papers chosen by

  1. Children’s socio-emotional skills: Is there a quantity–quality trade-off? By Simon Briole; Héléne Le Forner; Anthony Lepinteur
  2. Overestimate yourself or underestimate others? Two sources of bias in bargaining with joint production By Quentin Cavalan; Vincent De Gardelle; Jean-Christophe Vergnaud
  3. Time Inconsistency, Sophistication, and Commitment An Experimental Study By Zhang, Quing ⓡ; Greiner, Ben
  4. Psychological Resilience to Major Socioeconomic Life Events By Etilé, Fabrice; Frijters, Paul; Johnston, David W.; Shields, Michael A.

  1. By: Simon Briole (PSE - Paris School of Economics); Héléne Le Forner (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Anthony Lepinteur (University of Luxembourg [Luxembourg])
    Abstract: Although it is widely acknowledged that non-cognitive skills matter for adult outcomes, little is known about the role played by family environment in the formation of these skills. We use a longitudinal survey of children born in the UK in 2000–2001, the Millennium Cohort Study by the Centre for Longitudinal Studies, to estimate the effect of family size on socio-emotional skills, measured by the Strengths and Difficulties Questionnaire. To account for the endogeneity of fertility decisions, we use a well-known instrumental approach that exploits parents' preference for children's gender diversity. We show that the birth of a third child negatively affects the socio-emotional skills of the first two children in a persistent manner. However, we show that this negative effect is entirely driven by girls. We provide evidence that this gender effect is partly driven by an unequal response of parents' time investment in favour of boys and, to a lesser extent, by an unequal demand for household chores.
    Keywords: Non-cognitive skills,Family size,Birth order,Child development
    Date: 2020
  2. By: Quentin Cavalan (Centre d'Economie de la Sorbonne - Université Paris 1 panthéon-Sorbonne, Paris School of Economics;; Vincent De Gardelle (Centre d'Economie de la Sorbonne - CNRS, Paris School of Economics;; Jean-Christophe Vergnaud (CNRS - Centre d'Economie de la Sorbonne;
    Abstract: Although conflicts in bargaining have attracted a lot of attention in the literature, situations in which bargainers have to share the product of their performance have been rarely investigated theoretically and empirically. Here, by decomposing the well-known overplacement effect, we show that two types of biases can lead to conflict in these situations: players might be overconfident in their own production (overconfidence bias) and/or underestimate the production of others (other-underestimation bias). To quantify these biases, we develop a novel experimental setting using a psychophysically controlled production task within a bargaining game. In comparison to Bayesian agents, participants tend to disagree too often, partly because they exhibit both cognitive biases. We test interventions to mitigate these biases, and are able to increase settlements mainly by reducing the other-underestimation bias. Our approach illustrates how combining psychophysical methods and economic analyses could prove helpful to identify the impact of cognitive biases on individuals' behavior
    Keywords: overconfidence; bargaining; joint production; belief updating
    JEL: C91 D03 D74 D81
    Date: 2020–02
  3. By: Zhang, Quing ⓡ; Greiner, Ben
    Abstract: We experimentally study the relationship between time inconsistency, sophistication about time inconsistency, and self-commitment. Previous research has interpreted demand for commitment devices as evidence for the sophistication of a time-inconsistent decision-maker. In our laboratory experiment, we attempt to measure sophistication directly by way of a cognitive test. We then test the hypothesis that people who are both time-inconsistent and show high cognitive capacity take up commitment devices when offered in the strategic game between their current and their future self. For experimental laboratory commitment choices, we cannot detect a moderating effect of cognition on commitment demand of time-inconsistent subjects. However, we find that the existence of time-inconsistent preferences and sophistication (proxied by cognitive performance) can predict the demand for savings commitment in our hypothetical survey vignette question.
    Keywords: time-inconsistency, sophistication, present bias, future bias
    Date: 2020–03–25
  4. By: Etilé, Fabrice (INRA-CORELA); Frijters, Paul (London School of Economics); Johnston, David W. (Monash University); Shields, Michael A. (Monash University)
    Abstract: Understanding who in the population is psychologically resilient in the face of major life events, and who is not, is important for policies that target reductions in disadvantage. In this paper we construct a measure of adult resilience, document its distribution, and test its predictability by childhood socioeconomic circumstances. We use a dynamic finite mixture model applied to 17 years of panel data, and focus on the psychological reaction to ten major adverse life events. These include serious illness, major financial events, redundancy and crime victimisation. Our model accounts for nonrandom selection into events, anticipation of events, and differences between individuals in the immediate response and the speed of adaptation. We find considerable heterogeneity in the response to adverse events, and that resilience is strongly correlated with clinical measures of mental health. Resilience in adulthood is predictable by childhood socioeconomic circumstances; the strongest predictor is good childhood health.
    Keywords: psychological resilience, major life events, non-cognitive skills, childhood, panel data, mixture model
    JEL: I10 C2 C5
    Date: 2020–03

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