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on Neuroeconomics |
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Issue of 2021‒08‒09
three papers chosen by |
| By: | Alderotti, Giammarco; Rapallini, Chiara; Traverso, Silvio |
| Abstract: | The past two decades have witnessed an increasing interest in the relationship between personality and labor market outcomes, as well as the emergence of the Five-Factor Model as the reference framework for the study of personality. In this paper, we provide the first meta-analytical review of the empirical literature on the association between personal earnings and the Big Five personality traits. The analysis combines the results of 65 peer-reviewed articles published between 2001-2020, from which we retrieved 936 partial effect sizes. Overall, the primary literature provides robust support for a positive association between personal earnings and the traits of Openness, Conscientiousness, and Extraversion, while simultaneously revealing a negative and significant association between earnings and the traits of Agreeableness and Neuroticism. We find no evidence of a substantial publication bias. Meta-regression estimates suggest that Openness and Conscientiousness are positively associated with earnings even when primary researchers control for individual cognitive abilities and educational attainments. Similarly, the studies that includes labor market control variables exhibit weaker associations between earnings and Extraversion and Agreeableness. The results of the primary studies seem unaffected by the time at which the Big Five are measured, as well as by the scale and number of inventory items. Meta-regression estimates suggest that the results of the primary literature are not stable across cultures and gender, and that the ranking and academic field of the journal matter. |
| Keywords: | Big Five personality traits,earnings,meta-analysis |
| JEL: | J24 D91 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:902&r= |
| By: | Lorenzo Esposito (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – Banca d'Italia, Milano); Lorenzo Marrese (DISCE, Università Cattolica del Sacro Cuore) |
| Abstract: | Results of behavioral economics pose a strong challenge to mainstream finance theory conclusions. We discuss, theoretically and empirically, the connections of cognitive skills, biases and financial decisions using the Cognitive Reflection Test (Frederick, 2005). In particular, we have chosen overconfidence, risk aversion, bandwagon effect, time preference and money illusion, among the biases most discussed in the literature. The experiment we conducted confirmed a role of the cognitive skills in determining the decision mechanism of the investor although not neatly, especially for more complex biases, such as money illusion. Finally, we expose policy alternatives, focusing on the role of financial education to tackle cognitive biases in finance and monetary policy. |
| Keywords: | cognitive biases, financial education, behavioral economics, CRT |
| JEL: | G41 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie5:dipe0019&r= |
| By: | Cobb-Clark, Deborah A.; Dahmann, Sarah Christina; Kamhöfer, Daniel A.; Schildberg-Hörisch, Hannah |
| Abstract: | We propose a broadly applicable empirical approach to classify individuals as timeconsistent versus naïve or sophisticated regarding their self-control limitations. Operationalizing our approach based on nationally representative data reveals that self-control problems are pervasive and that most people are at least partly aware of their limited self-control. Compared to naïfs, sophisticates have higher IQs, better educated parents, and are more likely to take up commitment devices. Accounting for both the level and awareness of self-control limitations has predictive power beyond one-dimensional notions of self-control that neglect awareness. Importantly, sophistication fully compensates for self-control problems when choices involve immediate costs and later benefits. Raising people's awareness of their own self-control limitations may thus assist them in overcoming any adverse consequences. |
| Keywords: | self-control,sophistication,naïveté,commitment devices,present bias |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:365&r= |