nep-neu New Economics Papers
on Neuroeconomics
Issue of 2023‒01‒30
two papers chosen by

  1. Cognitive Endurance, Talent Selection, and the Labor Market Returns to Human Capital By Germ\'an Reyes
  2. Predictive Mind Reading from First and Second Impressions: Better-than-chance Prediction of Cooperative Behavior. By Eric Schniter; Timothy W. Shields

  1. By: Germ\'an Reyes
    Abstract: Cognitive endurance -- the ability to sustain performance on a cognitively-demanding task over time -- is thought to be a crucial productivity determinant. However, a lack of data on this variable has limited researchers' ability to understand its role for success in college and the labor market. This paper uses college-admission-exam records from 15 million Brazilian high school students to measure cognitive endurance based on changes in performance throughout the exam. By exploiting exogenous variation in the order of exam questions, I show that students are 7.1 percentage points more likely to correctly answer a given question when it appears at the beginning of the day versus the end (relative to a sample mean of 34.3%). I develop a method to decompose test scores into fatigue-adjusted ability and cognitive endurance. I then merge these measures into a higher-education census and the earnings records of the universe of Brazilian formal-sector workers to quantify the association between endurance and long-run outcomes. I find that cognitive endurance has a statistically and economically significant wage return. Controlling for fatigue-adjusted ability and other student characteristics, a one-standard-deviation higher endurance predicts a 5.4% wage increase. This wage return to endurance is sizable, equivalent to a third of the wage return to ability. I also document positive associations between endurance and college attendance, college quality, college graduation, firm quality, and other outcomes. Finally, I show how systematic differences in endurance across students interact with the exam design to determine the sorting of students to colleges. I discuss the implications of these findings for the use of cognitive assessments for talent selection and investments in interventions that build cognitive endurance.
    Date: 2023–01
  2. By: Eric Schniter (Economic Science Institute, Chapman University); Timothy W. Shields (Economic Science Institute, Chapman University)
    Abstract: People’s appearance and behaviors in strategic interactions provide a variety of informative clues that can help people accurately predict beliefs, intentions, and future behaviors. Mind reading mechanisms may have been selected for that allow for better-than-chance prediction of others’ strategic social propensities based on the sparse information available when forming first and second impressions. We hypothesize that first impressions are based on prior beliefs and available information gleaned from another’s description and appearance. For example, where another’s gender is identified, prior gender stereotypes could influence expectations and correct guesses about them. We also hypothesize that mind reading mechanisms use second impressions to predict behavior: using new knowledge of past behaviors to predict future behavior. For example, knowledge of the last round behaviors in a repeated strategic interaction should improve the accuracy of guesses about the next round behavior. We conducted a two-part study to test our predictive mind reading hypotheses and to evaluate evidence of accurate cheater and cooperator detection. First, across multiple rounds of play between matched partners, we recorded thin slice videos of university students just prior to their choices in a repeated Prisoner’s Dilemma. Subsequently, a worldwide sample of raters recruited online evaluated either thin-slice videos, photo stills from the videos, no images with gender labeled, or no images with gender blinded for each target. Raters guessed players’ Prisoner’s Dilemma choices in the first round, and, again, in the second round after viewing first round behavior histories. Indicative of mindreading: in all treatments where targets are seen, or their gender is labeled, or their behavioral history is provided, raters guess unacquainted players’ behavior with above-chance accuracy. Overall, cooperators are more accurately detected than cheaters. In both rounds, both cooperator and cheater detection are significantly more accurate when players’ photo or video are seen, where their gender is revealed by image or label, and under conditions with behavioral history. These results provide supporting evidence for predictive mind reading abilities that people use to efficiently detect cooperators and cheaters with betterthan-chance accuracy under sparse information conditions. This ability to apply and hone predictive mindreading may help explain why cooperation is commonly observed among strangers in everyday social dilemmas.
    Keywords: Mind reading, Cheater detection, Cooperation, Prisoner’s dilemma, Photographs, Thin slices
    JEL: B52 C72 C73 D63 D64 D83 D84
    Date: 2022

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