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on Cognitive and Behavioural Economics |
| By: | Michele Bernasconi (Department of Economics, University Of Venice Cà Foscari); Luca Corazzini (Dipartimento di Scienze Economiche, Università di Padova.); Anna Marenzi (Dipartimento di Economia, Università dell'Insubria.) |
| Abstract: | We study individual behaviour in a repeated linear public good experiment in which, in each period, subjects are required to contribute a minimum level and face a certain probability to be audited. Audited subjects who contribute less than the minimum level are convicted to pay the difference between the obligation required and the voluntary contribution. We study the ‘expressive’ power of the obligations. While at early stages subjects contribute the minimum level, with repetition contributions decline below the required amount indicating that expressive obligations are not capable to sustain cooperation. We observe that expressive obligations exert a rather robust crowding-out effect on voluntary contributions as compared to a standard public good game. The crowding-out is stronger when payments collected by the monitoring activity are distributed to subjects rather than when they are pure dead-weight-loss. |
| Keywords: | Expressive law, motivation crowding theory, laboratory experiments |
| JEL: | C91 H26 H41 K40 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2010_04&r=cbe |
| By: | Alpízar, Francisco; Martinsson, Peter |
| Abstract: | Using a natural field experiment in a recreational site, a public good almost fully dependent on voluntary donations, we explored the crowding-out effect of gift rewards. First, we investigated whether receiving a map in appreciation of a donation crowded out prosocial behavior and found no significant effect of giving the map. Second, we explored the effect of adding the map to a treatment designed to increase donations. Interestingly, when the gift was combined with our attempt to trigger reputational and self image motives, the probability of donating decreased significantly, compared to the social reference treatment alone. |
| Keywords: | crowding-out, donation, natural field experiment, reciprocity |
| JEL: | C93 D10 D60 Q50 |
| Date: | 2010–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-10-06-efd&r=cbe |
| By: | Leonardo Becchetti (University of Rome Tor Vergata); Giacomo Degli Antoni (EconomEtica); Marco Faillo (University of Trento - Faculty of Economics) |
| Abstract: | The paper is divided in six sections. In the second section we provide a short survey of the literature on relational goods. In the third section we describe the experimental design of the two experiments presented in Becchetti et al. (2007) and Becchetti, Degli Antoni and Faillo (2009) (hereafter also B2007 and B2009). In the fourth section we discuss the hypotheses on the effect of relational goods on players’ behaviour in the two experiments. In the fifth section we discuss the main findings. The sixth section concludes. |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp18&r=cbe |
| By: | Robin Cubitt (School of Economics, University of Nottingham); Maria Ruiz-Martos (Economics Department, University of Warwick); Chris Starmer (School of Economics, University of Nottingham) |
| Abstract: | The paper reports an experiment which tests the principle of separability, i.e. that behaviour in a dynamic choice problem is independent of history and of unreachable eventualities. Although this is a well-known principle of orthodox decision theory and central to conventional economic modelling, it has been questioned on grounds suggested by non-expected utility models of choice under risk and by the psychology of affective influences on risk-taking. Our experimental design, which provides between-subjects tests of separability using three treatments in which the history preceding a decision is manipulated, is inspired by these concerns. We expose separability to a clean and harsh test, but find no evidence that it is violated. |
| Keywords: | Separability; history-independence; non-expected utility; risk and affect |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2010-01&r=cbe |
| By: | Dohmen Thomas; Falk Armin (METEOR) |
| Abstract: | This paper studies the impact of incentives on worker self-selection in a controlled laboratory experiment. Subjects face the choice between a fixed and a variable payment scheme. Depending on the treatment, the variable payment is a piece rate, a tournament or a revenue-sharing scheme. We find that output is higher in the variable pay schemes (piece rate, tournament, and revenue sharing) compared to the fixed payment scheme. Thisdifference is largely driven by productivity sorting. In addition personal attitudes such as willingness to take risks and relative self-assessment as well as gender affect the sorting decision in a systematic way. Moreover, self-reported effort is significantly higher in all variable pay conditions than in the fixed wage condition. Our lab findings are supported by an additional analysis using data from a large and representative sample. In sum, our findings underline the importance of multi-dimensional sorting, i.e., the tendency for different incentive schemes to systematically attract people with different individual characteristics. |
| Keywords: | microeconomics ; |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2010012&r=cbe |
| By: | Dohmen Thomas; Falk Armin (ROA rm) |
| Abstract: | We analyse worker self-selection with a special focus on teachers. The point of the paper is that worker composition is generally endogenous, due to worker self-selection. In a first step we analyse lab experimental data to provide causal evidence on particular sorting patterns. This evidence sets the stage for our field data analysis, which focuses specifically on selection patterns of teachers. We find that teachers are more risk averse than employees in other professions, which indicates that relatively risk averse individuals sort into teaching occupations under the current system. Using survey measures on trust and reciprocity we also find that teachers trust more and are less negatively reciprocal than other employees. Finally, we establish differences in personality based on the Big Five concept. |
| Keywords: | education, training and the labour market; |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2010002&r=cbe |
| By: | Friedel Bolle (European University Viadrina); Jonathan H.W. Tan (University of Nottingham); Daniel John Zizzo (University of East Anglia) |
| Abstract: | Vendettas occur in many real world settings where rivals compete for a prize, e.g., winning an election or a competitive promotion, by engaging in retaliatory aggressive behavior. We present a benchmark experiment where two players have an initial probability of winning a prize. Retaliatory vendettas occur and lead agents to the worst possible outcomes in 60% to 80% of cases, counter to self interest predictions, and regardless of whether initial winning probabilities are equal or unequal. Negative emotions are important and interact with economic settings to produce large social inefficiencies. Venting emotions predicts aggression but also reduces it. |
| Keywords: | trust, income inequality, market, social capital |
| JEL: | C91 C72 H41 D64 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2010-02&r=cbe |
| By: | N Powdthavee; S Wu; A Oswald |
| Abstract: | Little is known about why some human beings make risky life-choices. This paper provides evidence that people's health decisions and addictive actions are influenced by the gender of their children. Having a daughter leads individuals -- in micro data from Great Britain and the United States -- to reduce their smoking, drinking, and drug-taking. The paper's results are consistent with the hypothesis that human beings 'self-medicate' when under stress. |
| Keywords: | Addictive behaviour; gender; daughters; smoking; drinking; attitudes. |
| JEL: | D1 I1 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:10/03&r=cbe |
| By: | Karagözoğlu Emin (METEOR) |
| Abstract: | This paper attempts to explain how and why seemingly contradictory beliefs co-exist in an optimizing individual''s mind in the long run. We set up a dynamic model of decision-making inwhich the individual.s mind is composed of a coordinating principal and two conflicting agents. We take into account the cognitive dissonance experienced due to the conflict between the agents. Each agent (or self ) is specialized in perceiving a particular type of signal, which describes the world. Cognitive dissonance levels in our model are not constant. Instead, the individual''s split-selves are open to habituation, which can lead to a reduction in cognitive dissonance. We prove the existence of an optimal strategy with a threshold structure. Our results show that the co-existence of conflicting beliefs might be an equilibrium phenomenon even in an optimizing mind. Suggestions that may avoid the tension that occurs due to cognitive dissonance are made. |
| Keywords: | microeconomics ; |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2010014&r=cbe |
| By: | Lorenzo Masiero (Istituto Ricerche Economiche (IRE), Università della Svizzera Italiana, Svizzera); David A. Hensher (Institute of Transport and Logistics Studies (ITLS), The University of Sydney, Australia) |
| Abstract: | It is widely recognized that individual decision making is subject to the evaluation of gains and losses around a reference point. The estimation of discrete choice models increasingly use data from stated choice experiments which are pivoted around a reference alternative. However, to date, the specification of a reference alternative in transport studies is fixed, whereas it is common to observe individuals adjusting their preferences according to a change in their reference point. This paper focuses on individual reactions, in a freight choice context, to a negative change in the reference alternative values, identifying the behavioural implications in terms of loss aversion and diminishing sensitivity. The results show a significant adjustment in the valuation of gains and losses around a shifted reference alternative. In particular, we find an average increase in loss aversion for cost and time attributes, and a substantial decrease for punctuality. These findings are translated to significant differences in the willingness to pay and willingness to accept measures, providing supporting evidence of respondents’ behavioural reaction. |
| Keywords: | Willingness to pay, gains and losses, freight choice, reference alternative |
| JEL: | C25 L91 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpaper:1005&r=cbe |
| By: | John M. Rose (Institute of Transport and Logistics Studies (ITLS), The University of Sydney, Australia); Lorenzo Masiero (Istituto Ricerche Economiche (IRE), Università della Svizzera Italiana, Svizzera) |
| Abstract: | The importance of willingness to pay (WTP) and willingness to accept (WTA) measures in the evaluation of policy measures has led to a constant stream of research examining survey methods and model specifications seeking to capture and explain the concept of marginal rates of substitution as much as possible. Stated choice experiments pivoted around a reference alternative allow the specification of discrete choice models to accommodate the prospect theory reference dependence assumption. This permits an investigation of theories related to loss aversion and diminishing sensitivity, and to test the discrepancy between WTP and WTA, widely documented within the literature. With more advanced classes of discrete choice models at our disposal, it is now possible to test different preference specifications that are better able to measure WTP and WTA values. One such model allowing for utility to be directly specified in WTP space has recently shown interesting qualities. This paper compares and contrasts models estimated in preference space to those estimated in WTP space allowing for asymmetry in the marginal utilities by estimating different parameters according to reference, gain and loss values. The results suggest a better model fit for the data estimated in WTP space, contradicting the findings of previous researches. The parameter estimates report significant evidence of loss aversion and diminishing sensitivities even though the symmetric specification outperforms the asymmetric ones. Finally, the analysis of the WTP and WTA measures confirms the higher degree of WTA compared to WTP, and highlights the appeal of the WTP space specification in terms of plausibility of the estimated measures. |
| Keywords: | choice experiments, willingness to pay space, preference asymmetry |
| JEL: | C25 L91 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpaper:1006&r=cbe |
| By: | Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Alexander G. James (University of Wyoming - Department of Economics and Finance); Stéphane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Jason F. Shogren (University of Wyoming - Department of Economics and Finance) |
| Abstract: | Environmental economics is now a long standing field of research ; much has been learned on how environmental policy can use incentives to drive individual behaviors. Among the many examples, preference elicitation is the most discussed case in which incentives fail to accurately implement efficient behavior. Using this as our motivating example, herein we explore the cross-fertilization between environmental economics and social psychology. We first review how the lessons drawn from social psychology helped address the hypothetical bias issue. We then turn to the future of this process by focusing on how cheap talk scripts influence preference elicitation. Our experimental results shows CT scripts work through persuasion – i.e. changes mind, but poorly changes actions. in that sense, preference elicitation still lacks a way of making communication binding – i.e. a way to alter intrinsic motivation of subjects to behave truthfully. |
| Keywords: | Social psychology, commitment, persuasive communication, preference elicitation. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00462193_v1&r=cbe |