nep-neu New Economics Papers
on Neuroeconomics
Issue of 2023‒04‒03
three papers chosen by

  1. Information Aggregation and the Cognitive Make-up of Market Participants By Brice Corgnet; Mark Desantis; David Porter
  2. Simplistic Rhetoric and Poe’s Law By Giovanni Andreottola; Elia Sartori
  3. Trends in Gender and Racial/Ethnic Disparities in Physical Disability and Social Support among U.S. Older Adults with Cognitive Impairment Living Alone, 2000-2018 By Chen, Shanquan; Zhang, Huanyu; Underwood, Benjamin R.; Wang, Dan; Chen, Xi; Cardinal, Rudolf N.

  1. By: Brice Corgnet (EM - emlyon business school); Mark Desantis; David Porter
    Abstract: We assess the effect of the cognitive make-up of market participants on the informational efficiency of markets. We put forth that cognitive skills, such as cognitive reflection, are crucial for ensuring the informational efficiency of markets because they endow participants with the ability to infer others' information from prices. Using laboratory experiments, we show that information aggregation is significantly enhanced when (i) all participants possess high levels of cognitive sophistication and (ii) this high level of cognitive sophistication is common information for all participants. Our findings shed light on the cognitive and informational constraints underlying the efficient market hypothesis.
    Keywords: Information aggregation, cognitive reflection, Experimental asset markets, behavioral finance
    Date: 2021–04–01
  2. By: Giovanni Andreottola (Vienna University of Economics and Business (WU) and CSEF); Elia Sartori (CSEF)
    Abstract: We study the use of simplistic arguments in political communication, developing a novel model of mobilization through rhetoric with naive and sophisticated voters. We show that politicians sometimes choose simplistic arguments in order to appear more competent, exploiting what we call Poe’s Law, that is, the uncertainty on whether the argument used by the politician reflects her own competence or is ‘degraded’ to meet the demand for simplistic arguments of the naive electorate. We compare the Bayes Nash game with a game in which sophisticated voters are unable to conceptualize Poe’s Law, dismissing their peers’ cognitive abilities and identifying with a leader that speaks to a fully naive crowd. The two games have opposed predictions on how expected simplism departs from its demand-driven benchmark, as well as on the interpretation of extreme arguments. Our results demonstrate that dismissal is a valid rationalization of an overly simplistic political debate.
    Keywords: Simplistic rhetoric, Dismissal, Poe’s Law, Populism.
    JEL: D72 D82 D83 D91
    Date: 2023–02–17
  3. By: Chen, Shanquan; Zhang, Huanyu; Underwood, Benjamin R.; Wang, Dan; Chen, Xi; Cardinal, Rudolf N.
    Abstract: Informal care is a primary source of support for older adults with cognitive impairment but is less available to those who live alone. We leverage the U.S. Health and Retirement Survey 2000-2018 to examine trends in the prevalence of physical disability and social support among older adults with cognitive impairment living alone, and their gender and racial/ethnic disparities. Information on physical disability and social support was collected through measures of basic and instrumental activities of daily living (BADLs, IADLs). Logistic and Poisson regression were adopted to estimate linear trends over time for binary and integer outcomes, respectively. Among those who reported BADL/IADL disability, the proportion unsupported for BADLs decreased significantly over time, while the proportion unsupported for IADLs increased significantly over time. Among those who received IADL support, the number of unmet IADL support needs increased significantly over time. Over time, Black respondents had a relatively increasing trend of being BADL-unsupported, and Hispanic and Black respondents had a relatively increasing trend in the number of unmet BADL needs, compared to the corresponding trends in White respondents. Among US older adults with cognitive impairment living alone, fewer people received IADL support over time, and the extent of unmet IADL support needs increased. Racial/ethnic disparities were seen both in the prevalence of reported BADL/IADL disability and unmet needs for BADL/IADL support; some but not all were compatible with a reduction in disparity over time. Our findings may prompt customized interventions to reduce disparities and unmet support needs.
    Keywords: gender disparity, racial/ethnic disparity, physical disability, social support, cognitive impairment
    JEL: I10 J11 J14 J15 J16
    Date: 2023

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