nep-neu New Economics Papers
on Neuroeconomics
Issue of 2022‒07‒25
three papers chosen by

  1. Assortativity in cognition By Ennio Bilancini; Leonardo Boncinelli; Eugenio Vicario
  2. Looming Large or Seeming Small? Attitudes Towards Losses in a Representative Sample By Jonathan Chapman; Erik Snowberg; Stephanie Wang; Colin Camerer
  3. Political ideology, mood response, and the confirmation bias. By David L. Dickinson

  1. By: Ennio Bilancini; Leonardo Boncinelli; Eugenio Vicario
    Abstract: In pairwise interactions assortativity in cognition means that pairs where both decision-makers use the same cognitive process are more likely to occur than what happens under random matching. In this paper we study both the mechanisms determining assortativity in cognition and its effects. In particular, we analyze an applied model where assortativity in cognition helps explain the emergence of cooperation and the degree of prosociality of intuition and deliberation, which are the typical cognitive processes postulated by the dual process theory in psychology. Our findings rely on agent-based simulations, but analytical results are also obtained in a special case. We conclude with examples showing that assortativity in cognition can have different implications in terms of its societal desirability.
    Date: 2022–05
  2. By: Jonathan Chapman; Erik Snowberg; Stephanie Wang; Colin Camerer
    Abstract: We measure individual-level loss aversion using three incentivized, representative surveys of the U.S. population (combined N = 3,000). We find that around 50% of the U.S. population is loss tolerant, with many participants accepting negative-expected-value gambles. This is counter to earlier findings−which mostly come from lab/student samples−and expert predictions that 70-90% of participants are loss averse. Consistent with the difference between our study and the prior literature, loss aversion is more prevalent in people with high cognitive ability. Loss-tolerant individuals are more likely to report recent gambling and to have experienced financial shocks. These results support the general hypothesis that individuals value gains and losses differently, although the tendency in a large proportion of the population to emphasize gains over losses is an overlooked behavioral phenomenon.
    Keywords: loss aversion, DOSE, risk preferences, cognitive ability, negative shocks, gambling
    JEL: C81 C90 D03 D81 D90
    Date: 2022
  3. By: David L. Dickinson
    Abstract: The confirmation bias is a well-known form of motivated reasoning that serves to protect an individual from discomfort. Hearing opposing viewpoints or information creates cognitive dissonance, and so avoiding exposure to, or discounting the validity of, dissonant information are rational strategies that may help avoid or mitigate negative emotion. Because there is often a systematic thought process involved in generating the confirmation bias, deliberation tends to promote this behavioral bias. Nevertheless, the importance of negative emotion in triggering the need for this bias is an underappreciated facet of the confirmation bias. This paper addresses this gap in the literature by examining mood and the confirmation bias in the political domain. Using data from two studies and three distinct decision tasks, we present data on over 1100 participants (Study 1, n=611; Study 2, n=503) that document the confirmation bias in different settings. Specifically, task 1 (Study 1) examines perceptions of opposing argument strength in a classic confirmation bias task. Task 2 (Study 1) is a novel task that measures the change in one’s perceptions and normative preferences regarding political issues after receipt of a random issue-specific informational message. Finally, Task 3 (Study 2) administers a Bayesian decision task to examine one’s belief-updating regarding the truthfulness of factual political statements after receipt of a noisy signal about whether the statement is true or false. All methods (recruitment and sample size, hypotheses, variables, analysis plans, etc.) were preregistered on the Open Science Framework. Our data show evidence of a confirmation bias across the variety of tasks administered, which covered distinct dimensions of belief and preference formation. As hypothesized, the data show a strong increase in self-reported negative mood states after viewing political statements or information that are dissonant with one’s political ideology. Finally, while not as robust across tasks, we report evidence that supports our hypothesis that negative mood will moderate the strength of the confirmation bias. Together, these results highlight the importance of mood response in understanding the confirmation bias, which helps further our understanding of how this bias may be particularly difficult to combat. Key Words: confirmation bias; sleep; deliberation; cognitive reflection; motivated reasoning
    Date: 2022

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