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on Neuroeconomics |
| By: | Gill, David (Purdue University); Qiao, Zhongheng (Purdue University) |
| Abstract: | Workers and organizations routinely choose the complexity of tasks that they undertake. We study how cognitive ability and overconfidence shape this choice of task complexity, both theoretically and experimentally. Consistent with our model, we find that more cognitively able individuals choose more complex tasks. Conditional on cognitive ability, we find that more overconfident individuals also choose more complex tasks. About 80% of subjects pick their payoff-maximizing task, and higher cognitive ability predicts more efficient choices of task complexity. But errors are strikingly one-sided: nearly all who fail to choose optimally pick tasks that are too complex. Our findings suggest that organizations should pair task menus and incentives for choosing more complex tasks with information and feedback that help workers assess their ability and probability of success. This preserves the benefits of self-selection while reducing costly overreach. |
| Keywords: | cognitive ability, complexity, task choice, choice efficiency, overconfidence, experiment |
| JEL: | C91 D03 D83 D91 J24 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18834 |
| By: | Gill, David (Purdue University); Rosokha, Yaroslav (Purdue University) |
| Abstract: | In this paper, we identify level-k reasoning in repeated games that operates at the level of a supergame strategy. First, we develop a model of level-k reasoning that incorporates choices over strategies as well as beliefs about the strategies chosen by others. Then, jointly using elicited strategies and beliefs about strategies from the indefinitely repeated Prisoner's Dilemma, and applying a new notion of balance-optimal error tolerance, we classify a substantial fraction of subjects as level-1 or level-2. Moreover, we show that when level-k reasoning operates at the level of a repeated-game strategy, cognitive ability and experience predict higher level reasoning. |
| Keywords: | level-k, repeated game, Prisoner's Dilemma, strategy, beliefs, cognitive ability, experience, elicitation, bounded rationality, experiment, game theory |
| JEL: | C73 D83 D91 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18832 |
| By: | Ba, Cuimin; Bohren, Aislinn; Imas, Alex |
| Abstract: | This paper explores how cognitive constraints interact with the information environment to determine whether people overreact or underreact to information. In our model of belief updating, limited attention leads people to form a distorted mental model or representation of the information environment, and limited processing capacity generates cognitive imprecision when using this representation to update beliefs. The model predicts overreaction when facing complex environments, noisy or surprising signals, or priors concentrated on moderate states; it predicts underreaction when facing simple environments, precise or confirmatory signals, or priors concentrated on extreme states. A series of pre-registered experiments provide support for these predictions and direct evidence for the proposed cognitive mechanisms. Crucially, the interaction between the cognitive constraints generates the observed pattern of bias: neither constraint on its own can explain the data. These results connect prior disparate findings on whether underreaction versus overreaction arises. |
| Keywords: | overreaction; underreaction; beliefs |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19576 |
| By: | Bagues, Manuel; Villa, Carmen |
| Abstract: | Over the past decades, many European countries have raised the minimum legal drinking age (MLDA) from 16 to 18 years. This study provides novel evidence of the impact of this policy on educational outcomes by exploiting the staggered timing of MLDA changes across Spanish regions. Raising the MLDA decreased alcohol consumption among adolescents aged 14–17 by 8 to 18% and improved their exam performance by 4% of a standard deviation. This effect appears driven by alcohol's direct impact on cognitive ability, as we find no significant changes in potential mediators like use of other substances or time spent on leisure activities, including socialising, sports, gaming, or internet use. We also observe a decrease in tranquilliser and sleeping pill use, suggesting improved mental health. Our findings indicate that reducing teenage alcohol consumption represents a significant opportunity to improve educational outcomes in Europe, where youth drinking rates remain notably high. |
| JEL: | I18 I12 I21 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19733 |
| By: | Danny, Lauren |
| Abstract: | Generative artificial intelligence integration into professional workflows alter the landscape of cognitive labor and knowledge production. Utilizing a qualitative study of 45 knowledge workers across technology and creative sectors, this research investigates the shifting boundaries of professional autonomy. We propose the notion of Prompt Dependency, defined as the systemic erosion of self-directed analytical capacity resulting from the habitual delegation of complex problem-solving to large language models. Users they perceive these tools as efficiency enhancers, but our analysis reveals an inversion of agency where the mastery of algorithmic interaction begins to supersede the mastery of the domain itself. Findings indicate that participants experience reduced critical synthesis and increased reliance on automated heuristics. Further observations it suggest the atrophy of foundational domain skills and a normalization of algorithmic output as a baseline for professional truth. By mapping these dimensions, we demonstrate that the efficiency gains of AI are paradoxically tethered to a long-term degradation of individual expertise. These results suggest that organizational policies must prioritize cognitive resilience or human-in-the-loop verification to mitigate the risks of structural deskilling in the age of automated cognition. |
| Date: | 2026–07–21 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:rmvqu_v1 |
| By: | Qian, Yuting (Yale University); Gavulic, Kyle (Yale University); Chen, Xi (Yale University) |
| Abstract: | A documented diagnosis only benefits patients who know about it. Using nationally representative Health and Retirement Study data linked to Medicare claims (1998–2020), we quantify the gap between clinically documented dementia diagnoses and patients' own reports. Among self-respondents with probable dementia and a claims-based diagnosis, 67 percent do not report having been diagnosed—more than double the average underreporting rate for arthritis, hypertension, diabetes, and depression among the same population—and underreporting is highest in the early disease stage, precisely when decision-making capacity is greatest. Underreporting is more prevalent among individuals who live alone, are dually eligible, have less education, and are non-Hispanic Black, and less prevalent among Medicare Advantage enrollees and patients seen by dementia specialists, consistent with roles for stigma, social vulnerability, and provider disclosure incentives. Underreporting predicts lower post-diagnosis care engagement and a lower likelihood of establishing a will or trust, suggesting information frictions undermine the returns to early detection. |
| Keywords: | dementia, underreporting, diagnostic disclosure, Medicare, aging, cognitive decline, end-of-life planning |
| JEL: | I11 I12 I14 J14 D83 I18 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18819 |
| By: | Guimbeau, Amanda (University of Sherbrooke); Ji, James (University of Guelph); Menon, Nidhiya (Brandeis University); Witoelar, Firman (Australian National University) |
| Abstract: | Mangroves provide vital ecosystem services, including fisheries support, carbon sequestration, and natural protection against coastal erosion, but their health consequences are less well understood. We study their impacts on mental health and cognitive functioning in Indonesia, which has the most extensive and biodiverse mangroves in the world. Decades of deforestation, fueled by climate pressures, oil palm expansion, and aquaculture, have led to widespread mangrove loss in the country, disproportionately affecting vulnerable coastal communities. By merging high-resolution satellite data on coastal land use change with individual-level panel data from the Indonesian Family Life Survey (IFLS), we find that a one-standard-deviation increase in local mangrove cover reduces the likelihood of clinical depression by 4.5 percentage points. These effects operate through reduced flood exposure, higher household income, and improved food consumption. We also find that restoration potential matters more than blue carbon potential, cash transfers, or social capital in shaping the mangrove-mental health relationship. Our results show that mangrove conservation and restoration can generate important local human capital and welfare benefits. |
| Keywords: | Mangroves, mental health, depression, CESD-10, cognitive ability, ecosystem, aquaculture, restoration, conservation |
| JEL: | Q57 Q50 O1 O13 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18818 |
| By: | Arnaud Natal (IFP - Institut Français de Pondichéry - MEAE - Ministère de l'Europe et des Affaires étrangères - CNRS - Centre National de la Recherche Scientifique, UB - Université de Bordeaux, BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Damien Girollet (BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UB - Université de Bordeaux) |
| Abstract: | Using original data from rural South India, we examine how personality traits intersect with caste and gender to shape interpersonal network characteristics in a Global South context. We analyse the relationship between four personality traits (emotional stability, plasticity, conscientiousness, and locus of control) and three network outcomes (strength of ties, caste, and gender heterophily) using econometric tools. We document four main findings. Firstly, personality traits significantly shape tie strength, reflecting differences in how individuals balance relational dependence and social autonomy. Secondly, personality is associated with selective social boundary crossing, which may facilitate interaction across caste lines, while remaining constrained by gender norms. Thirdly, personality traits shape network characteristics to a similar extent across networks, suggesting that ties remain governed by stable patterns of social interaction. Fourthly, personality operates as a context-dependent resource, shaping networks primarily among individuals who are structurally able to act, particularly men and middle castes. |
| Keywords: | Social network, Caste, Gender, Locus of control, Big Five |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05547405 |