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on Cognitive and Behavioural Economics |
| By: | Vittorio Pelligra |
| Abstract: | This paper reports the results of an experiment aimed at investigating the link between empathy, anticipated guilt and pro-social behavior. In particular we test the hypothesis that empathy modulates the anticipatory effect of guilt in bargaining situations and, more specifically, that it correlates with subjects’ willingness to give and to repay trust in an investment game. We also control for the effect of individual risk attitude. Our main results show that empathy significantly influences players’ pattern of restitution in the investment game and that risk-propensity weakly affects the decision to trust; we also find a significant gender difference in the distribution of empathy. These results seem to indicate that empathy affects pro-social behavior in a more complex way than previously hypothesized by existing models of social preferences. |
| Keywords: | Trust; Reciprocity; Guilt-Aversion; Empathy |
| JEL: | C78 C91 D63 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201108&r=cbe |
| By: | Carolina Castaldi; Giovanni Dosi |
| Abstract: | The note on which an entry for the Palgrave Encyclopedia of Strategic Management will draw offers a beginner’s guide to path dependency in technologies and organizations. We address the very meaning of the concept and its centrality in various aspects of economic analysis. We outline the various levels of the economic system where it is observable, its sources, consequences and different formal representations of path dependent processes. |
| Keywords: | path dependence, lock-in, organizations, technologies |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:tuecis:wpaper:1104&r=cbe |
| By: | Ed Hopkins |
| Abstract: | This paper investigates social infuences on attitudes to risk and offers an evolutionary explanation of risk-taking by young low-ranked males. Becker, Murphy and Werning (2005) found that individuals about to participate in a status tournament may take fair gambles even though they are risk averse in both wealth and status. Here their model is generalised by use of the insight of Hopkins and Kornienko (2010) that in a tournament or status competition one can consider equality in terms of the status or rewards available as well as in initial endowments. While Becker et al. found that risk-taking is increasing in the equality of initial endowments, it is found here that it is increasing in the inequality of rewards in the tournament. Further, it is shown that the poorest will be risk loving if the lowest level of status awarded is su±ciently low. Thus, the disadvantaged in society rationally engage in risky behavior when social rewards are su±ciently unequal. Finally, as greater inequality in terms of social status induces gambling, it can cause greater inequality of wealth. |
| Keywords: | risk, status, inequality. |
| JEL: | C72 D31 D62 D63 D81 |
| Date: | 2011–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:204&r=cbe |
| By: | Simon Gaechter (University of Nottingham); Esther Kessler (University College London); Manfred Koenigstein (Universitaet Erfurt) |
| Abstract: | Efficiency under contractual incompleteness often requires voluntary cooperation in situations where self-regarding incentives for contractual compliance are present as well. Here we provide a comprehensive experimental analysis based on the gift-exchange game of how explicit and implicit incentives affect cooperation. We first show that there is substantial cooperation under non-incentive compatible contracts. Incentive-compatible contracts induce best-reply effort and crowd out any voluntary cooperation. Further experiments show that this result is robust to two important variables: experiencing Trust contracts without any incentives and implicit incentives coming from repeated interaction. Implicit incentives have a strong positive effect on effort only under non-incentive compatible contracts. |
| Keywords: | principal-agent games; gift-exchange experiments; incomplete contracts, explicit incentives; implicit incentives; repeated games; separability; experiments |
| JEL: | C70 C90 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2011-06&r=cbe |
| By: | Ahmed Ennasri; Marc Willinger |
| Abstract: | We investigate the effects of competition on managerial incentives and effort in a laboratory experiment. Each owner offers compensation to his manager in two different contexts: monopoly and Cournot duopoly. After accepting the compensation, the manager chooses an effort level to increase the probability of reduced costs of his firm. Theory predicts that the entry of a rival firm in a monopolistic industry affects negatively both the incentive compensation and the effort level. Our experimental findings confirm that the entry of a rival firm reduces the incentive compensation but not the manager’s effort level. However, despite the reduction of the incentive compensation, the manager continues to accept the contract offers and exert the same level of effort. |
| Keywords: | Managerial Incentives, Effort, Competition, Moral hazard, Experiments |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:12-11&r=cbe |
| By: | Antoine BERETTI; Charles FIGUIERES; Gilles GROLLEAU |
| Abstract: | Economists recognize that monetary incentives can backfire through the crowding-out of moral and social motivations leading to an overall decrease of the desired behavior. We implement a field experiment where participants are asked to fill a questionnaire on pro-environmental behaviors under different incentive schemes, either with no monetary incentive (control) or with low or high monetary incentive directed either to the respondents or to an environmental cause. We investigate whether (i) there is a significant crowding-out effect, (ii) directing monetary incentive to the cause rather than to the respondents reduces the overall impact of a crowding-out effect, and (iii) offering the choice regarding the money recipient aects participation. Except for a high monetary incentive where the respondent chooses himself the end-recipient, we show that monetary rewards directed either at the individual or at the cause actually harms intrinsic motivations, but not to the same extent. We formalize our results building on an adaptation of an original model by Bolle and Otto (2010) and introduce agents heterogeneity in terms of intrinsic motivation. This heterogeneity has key implications for the understanding of the crowding-out eect. Several policy recommendations regarding the use of market-based instruments are drawn. |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:15-11&r=cbe |
| By: | Swee-Hoon Chuah (Nottingham University Business School, University of Nottingham); Robert Hoffmann (Nottingham University Business School, University of Nottingham); Jeremy Larner (Nottingham University Business School, University of Nottingham) |
| Abstract: | The standard chicken game is a popular model of certain important real scenarios but does not allow for the escalation behaviour these are typically associated with. This is problematic if the critical, final decisions in these scenarios are sensitive to previous escalation. We introduce and analyse, theoretically and by experiment, a new game which permits escalation behaviour. Compared with an equivalent chicken game, Pareto-suboptimal outcomes are significantly more frequent. This result is inconsistent with our rational choice analysis and possible psychological roots are explored. |
| Keywords: | escalation; brinkmanship; chicken game; experiments |
| JEL: | C72 C78 C91 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2011-05&r=cbe |
| By: | Karel Báa (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | Equity home bias is a situation on equity market where domestic investors prefer invest too much into domestic equities despite the possible gains from diversification into foreign equities. Equity home bias can arise as a result of institutional or behavioral factors. In this paper I will compare the evidence with the prediction of the model of optimal portfolio with three different utility functions (Markowitz, Exponential and CRRA) the results of the investment experiment and the evidence from OECD (2009). The results have shown that in total the Czech investors are home biased (they hold 85 % of domestic equities in their equity portfolios). However, in experimental lab conditions were the students rather foreign biased. They have chosen only 14 % of Czech equities as opposed to the model recommendation of 22-54%. The possible reasons for foreign biasness in experimental conditions can be the absence of transaction and informational cost and explicit FX risk. Furthermore, I have discovered that the successful experimental investors have higher investment knowledge and that they trust in intuition. |
| Keywords: | Investment experiment, equity home bias, behavioral finance, optimal investment portfolio |
| JEL: | G11 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2011_17&r=cbe |
| By: | Christoph Bühren (University of Kassel); Marco Pleßner |
| Abstract: | By extending a typical endowment effect experiment with the possibility to win the endow-ment in a real effort contest, we found two enforcing effects that led to a complete market failure. Subjects who won the item in the competition had an extremely high willingness to accept (trophy effect). By contrast, subjects who were not successful had an extremely low willingness to pay for the same item (reverse trophy effect). We disentangle the different components of the trophy effect, compare it to similar experiments, and discuss its important economic implications. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201125&r=cbe |
| By: | Douhou, S.; Magnus, J.R.; Soest, A.H.O. van (Tilburg University, Center for Economic Research) |
| Abstract: | Economic motives are not the only reasons for committing a (small) crime. People consider social norms and perceptions of fairness before judging a situation and acting upon it. If someone takes a bundle of printing paper from the office for private use at home, then a colleague who sees this can either report it or not: peer reporting. We investigate how fairness perception influences peer reporting in this situation of incorrect behavior. |
| Keywords: | Peer reporting;Perception;Social norms;Fairness;Employee theft;Victimization. |
| JEL: | C35 D63 K42 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011068&r=cbe |
| By: | Rees, Daniel I. (University of Colorado Denver); Sabia, Joseph J. (San Diego State University, California) |
| Abstract: | A number of studies have shown that childhood speech impairments such as stuttering are associated with lower test scores and educational attainment. However, it is unclear whether this result is causal in nature or whether it can be explained by difficult-to-measure heterogeneity at the community, family, or individual level. Using data from the National Longitudinal Study of Adolescent Health and ordinary least squares, we show that stuttering is negatively associated with high school grades, the probability of high school graduation, and the probability of college attendance. However, empirical specifications with family fixed effects or controls for learning disabilities such as Attention Deficit Hyperactivity Disorder suggest that these associations can, in large part, be explained by difficult-to-measure heterogeneity. |
| Keywords: | speech impairment, stuttering, human capital, educational attainment |
| JEL: | I1 I2 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5781&r=cbe |
| By: | Nathalie Lazaric (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis); Valérie Mérindol (IMRI - Université Paris Dauphine - Paris IX); Sylvie Rochhia (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis) |
| Abstract: | Defence innovation systems are structured around two main groups of players that interact in the development of complex programmes: the state (the client and the government agency) and the systems integrators. Technological and institutional changes since the 1990s have affected the division of labour and knowledge in the industry. In this paper we show the origins of these changes based on information derived from 45 qualitative interviews conducted between 2000 and 2008, which demonstrate the new capabilities that have been created within the national innovation system (NIS). We explain how the role and the capabilities of the French Government Agency for Defence (Direction Générale de l'Armement - DGA) have developed from " project architect " to " project manager ". These new capabilities create new interactions in the French Defence innovation system and new roles for the DGA. |
| Keywords: | Technological systems, Capabilities, Knowledge, Government agency, Co-evolution, National Innovation System, Defence, Institutional Change. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00599727&r=cbe |