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on Neuroeconomics |
| By: | Shuige Liu; Gabriel Ziegler |
| Abstract: | Interactive decision-making relies on strategic reasoning. Two prominent frameworks capture this idea. One follows a structural perspective, exemplified by level-k and Cognitive Hierarchy models, which represent reasoning as an algorithmic process. The other adopts an epistemic perspective, formalizing reasoning through beliefs and higher-order beliefs. We connect these approaches by "Lifting" static complete-information games into incomplete-information settings where payoff types reflect players' levels. Within this unified framework, reasoning is represented through mathematically explicit and transparent belief restrictions. We analyze three instances: downward rationalizability, a robust benchmark concept; and two refinements, L-rationalizability and CH-rationalizability, which provide epistemic foundations---albeit with a nuance---for the classic level-k and Cognitive Hierarchy models, respectively. Our results clarify how reasoning depth relates to behavioral predictions, distinguish cognitive limits from belief restrictions, and connect bounded reasoning to robustness principles from mechanism design. The framework thus offers a transparent and tractable bridge between structural and epistemic approaches to reasoning in games. |
| Keywords: | bounded reasoning, behavioral game theory, level-k, cognitive hierarchy, epistemic game theory, belief restrictions, Δ-rationalizability, robustness |
| JEL: | C72 D82 D83 D90 |
| Date: | 2025–10–20 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0079 |
| By: | Florence Arestoff (Universit´e Paris-Dauphine, Universit´e PSL, LEDa, CNRS, IRD, [DIAL], 75016 Paris, France); Olivia Bertelli (Universit´e Paris-Dauphine, Universit´e PSL, LEDa, CNRS, IRD, [DIAL], 75016 Paris, France); Elodie Djemai (Universit´e Paris-Dauphine, Universit´e PSL, LEDa, CNRS, IRD, [DIAL], 75016 Paris, France); Dirgha Ghimire (University of Michigan, US; ISER-N, Nepal); Uttam Sharma (Institute for Social and Environmental Research, Nepal (ISER-N), Nepal) |
| Abstract: | This study assesses the impacts of a parental education community training on child development in Nepal. Relying on a sample of approximately 1, 000 households, we randomly vary the access to the intervention. A few months after the end of the intervention, children in the treatment group exhibit significantly higher scores on early childhood development indicators—both overall and across linguistic, motor, and cognitive domains. In turn, the intervention has no sizable effects on anthropometric outcomes. Mechanism analysis reveals that the program improves parental knowledge about child development and enhances the quality of parent-child interactions. |
| Keywords: | Early Childhood Development, Impact evaluation, Randomized Control Trial, Nepal |
| JEL: | I26 J13 O22 O53 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:dia:wpaper:dt202507 |
| By: | Francesco Agostinelli; Zach Weingarten |
| Abstract: | The longstanding debate over whether human capabilities and skills are shaped more by “nature” or “nurture” has been revitalized by recent advances in genetics, particularly in the use of polygenic scores (PGSs) to proxy for genetic endowments. Yet, we argue that PGSs embed not only direct genetic effects but also indirect environmental influences, raising questions about their validity for causal analysis. We show that these conflated measures can mislead studies of gene–environment interactions, especially when parental behavior responds to children’s genetic risk. To address this issue, we construct a new latent measure of genetic risk that integrates individual genotypes with diagnostic symptoms, using data from the National Longitudinal Study of Adolescent to Adult Health linked to restricted individual SNP-level genotypes from dbGaP. Exploiting multiple sources of variation—including the Mendelian within-family genetic randomization among siblings—we find consistent evidence that parents compensate by investing more in children with higher genetic risk for ADHD. Strikingly, these compensatory responses disappear when genetic risk is proxied by the conventional ADHD PGS, which also yields weaker—and in some cases reversed—predictions for long-run outcomes. Finally, we embed our latent measure of genetic endowments into a standard dynamic structural model of child development. The model shows that both parental investments and latent genetic risk jointly shape children’s cognitive and mental health development, underscoring the importance of modeling the dynamic interplay between genes and environments in the formation of human capital. |
| JEL: | D10 H0 I1 I2 I20 J01 J1 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34427 |
| By: | Natal, Arnaud (University of Bordeaux); Nordman, Christophe Jalil (IRD, DIAL, Paris-Dauphine) |
| Abstract: | Taking the case of rural South India, we explore the universality of the Big Five personality traits and their stability over time. We then investigate the effects of two exogenous shocks on trait stability: the demonetisation of November 2016 and the second COVID-19 lockdown. We use an original longitudinal dataset collected in 2016-2017 and 2020-2021. After correcting the data for acquiescence bias and performing factor analysis, we find that three personality traits emerge: emotional stability, plasticity, and conscientiousness. We find no evidence of temporal stability. Results from the covariate-balancing propensity score weighting model shows that the demonetisation impacts plasticity and conscientiousness, with exposed individuals scoring notably higher. The second COVID-19 lockdown exerts a negative impact on emotional stability. |
| Keywords: | caste, COVID-19, demonetisation, plasticity, Big Five, gender, India |
| JEL: | D91 G51 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18210 |
| By: | Mangiavacchi, Lucia (University of Perugia); Piccoli, Luca (University of Trento); Stillman, Steven (Free University of Bozen/Bolzano) |
| Abstract: | This paper estimates the short-run impact of parental risky behaviors on multiple dimensions of child development using 30 years of data from a representative Russian longitudinal survey. We use factor analysis to construct a composite index of parental risky behaviors and health habits. The panel nature of the data allows us to implement individual and household fixed-effects models, which control for all time-invariant unobserved heterogeneity that might correlate with both parenting and child outcomes. We find that exposure to parental risky behaviors adversely affects children’s educational attainment (grade-for-age) and increases their propensity for risky behaviors, specifically smoking and drinking. Conversely, we find no significant impact on soft skills and only weak evidence of negative health outcomes. These impacts are more pronounced for older children and those in higher-income households. |
| Keywords: | intergenerational transmission, child development, risky behaviors, parental role model |
| JEL: | D1 I1 I2 I3 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18242 |