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on Cognitive and Behavioural Economics |
| By: | Steffen Andersen; James C. Cox; Glenn W. Harrison; Morten Lau; E. Elisabet Rutström; Vjollca Sadiraj |
| Abstract: | Measures of risk attitudes derived from experiments are often questioned because they are based on small stakes bets and do not account for the extent to which the decision-maker integrates the prizes of the experimental tasks with personal wealth. We exploit the existence of detailed information on individual wealth of experimental subjects in Denmark, and directly estimate risk attitudes and the degree of asset integration consistent with observed behavior. The behavior of the adult Danes in our experiment is consistent with partial asset integration: they behave as if some fraction of personal wealth is combined with experimental prizes in a utility function, and that this combination entails less than perfect substitution. Our subjects do not perfectly asset integrate. The implied risk attitudes from estimating these specifications imply risk premia and certainty equivalents that are a priori plausible under expected utility theory or rank dependent utility models. These are reassuring and constructive solutions to payoff calibration paradoxes. In addition, the rigorous, structural modeling of partial asset integration points to a rich array of neglected questions in risk management and policy evaluation in important field settings. |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2012-12&r=cbe |
| By: | Oliver Kirchkamp (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Ulrike Vollstädt (Jena Graduate School "Human Behaviour in Social and Economic Change", University of Jena) |
| Abstract: | Although many real bargaining situations involve more than two people, much of the theoretical and experimental research concentrates on the two player situation. We study the simplest possible extension: four people (two two-person groups) of different patience bargain with each other. Theoretically, only the more patient member of each group should be relevant for the outcome. The less patient members would agree to any outcome and are, hence, irrelevant. We find, however, that the impact of the patient member can be quite small. |
| Keywords: | bargaining experiment, heterogeneous group members |
| JEL: | C78 D74 |
| Date: | 2012–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2012-043&r=cbe |
| By: | Schubert, Manuel |
| Abstract: | Intention-based models of reciprocity argue that people assess kindness by measuring the intended consequences of actual behavior (deeds) against foregone payoffs resulting from unchosen alternatives (omissions). While the effects of omissions have been intensively studied in recent years, less has been done with respect to the impact of deeds on reciprocation. I employ a novel game that alters the intended consequences behind actual behavior at constant levels of unchosen alternatives and realized payoffs. Aggregate results suggest that intended consequences only weakly matter for negative reciprocity. I find men to abstain from retaliation when others intend to mildly harm them. Women, however, seem to be largely invariant to intended consequences of actual behavior. -- |
| Keywords: | intentions,reciprocity,kindness,gender |
| JEL: | D63 C78 C91 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:upadvr:v6512&r=cbe |
| By: | Eike Kroll (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Judith Trarbach (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Bodo Vogt (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | This paper investigates preferences for different health profiles, especially sequences of increasing and decreasing pain. We test conflicting predictions in terms of preferences over two painful sequences. The QALY concept relevant for the determination of different levels of health-related quality of life implies indifference, whereas behavioral theories find preferences related to ordering, following the peak-end-rule. Using an experimental design with real consequences we generate decisions about painful sequences induced by the cold pressor test. The results are compared with hypothetical choice data elicited using standard methods. We find that hypothetical methods reveal decisions in line with the peak-end-rule. However when it comes to real consequences of their decisions, subjects are on average not willing to pay for that preference. |
| Keywords: | pain, peak-end-rule, willingness-to-pay |
| JEL: | D8 C9 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:120012&r=cbe |
| By: | Altmann, Steffen (IZA); Traxler, Christian (University of Marburg) |
| Abstract: | We implement a randomized field experiment to study the impact of reminders on dental health prevention. Patients who are due for a check-up receive no reminder, a neutral reminder postcard, or reminders including additional information on the benefits of prevention. Our results document a strong impact of reminders. Within one month after receiving a reminder, the fraction of patients who make a check-up appointment more than doubles. The effect declines slightly over time, but remains economically and statistically significant. Including additional information in the reminders does not increase response rates. In fact, the neutral reminder has the strongest impact for the overall population as well as for important subgroups of patients. Finally, we document that being exposed to reminders repeatedly does neither strengthen nor weaken their effectiveness. |
| Keywords: | field experiment, reminders, nudges, memory limitations, prevention, dental health, framing |
| JEL: | D03 I11 C93 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6699&r=cbe |
| By: | Dur, R.; Vollaard, B.A. (Tilburg University, Center for Economic Research) |
| Abstract: | Abstract: Field-experimental studies have shown that people litter more in more littered environments.Inspired by these findings, many cities around the world have adopted policies to quickly remove litter. While such policies may avoid that people follow the bad example of litterers, they may also invite free-riding on public cleaning services. This paper reports the results of a natural field experiment where, in a randomly assigned part of a residential area, the frequency of cleaning was reduced from daily to twice a week during a three-month period. Using high-frequency data on litter at treated and control locations before, during, and after the experiment, we find strong evidence that litter begets litter. However, we also find evidence that some people start to clean up after themselves when public cleaning services are diminished. |
| Keywords: | littering;public services;free-riding;field experiment. |
| JEL: | C93 H40 K42 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2012054&r=cbe |
| By: | Sara Savastano (Faculty of Economics, University of Rome "Tor Vergata") |
| Abstract: | Linking to a growing literature in behavioral economics, this study combines neuroscience, psychology, and behavioral economics to empirically analyze the extent to which academic achievement, the relative weight of rationality vs. fairness in decision-making, and life satisfaction are affected by cognitive ability, persistent personality traits, and short-term stimuli based on psychological priming techniques. Prior to undertaking a course exam and playing the role of the respondent in an ultimatum game, a group of Masters and PhD students were stimulated either emotionally (via chocolate tasting) or rationally (via mathematical problem solving). Results show that, in addition to rational skills, short term stimuli and persistent personality traits have a significant impact on academic performance. They also influence the extent to which decisions are affected by notions of rationality and fairness and individuals’ subjective satisfaction with life. Given the economic importance of the associated outcomes, this opens up an important research agenda. |
| Keywords: | Neuroeconomics, Psychology and Behavioral Economics, Satisfaction with life, Rational Choices, Consumer Theory |
| JEL: | C91 D01 D87 D60 I20 |
| Date: | 2012–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:241&r=cbe |
| By: | Fabbri, Marco (Associazione Italiana per la Cultura della Cooperazione e del Non Profit) |
| Abstract: | The aim of this work is to show that in a repeated Public Goods Game situation it is possible, through the implementation of a properly specified policy reward, to increase and sustain higher level of contribution with respect to the only "punishment" equilibrium at net zero costs. I investigate theoretically the possibility that implementing a lottery, mechanism in a social dilemma could drive a consistent portion of the game participants’ decision to a different decision choice with respect to Von Neumann-Morgenstern Expected Utility Theory prediction. In particular, grounding my expectations on Cumulative Prospect Theory, I anticipate and exploit the players’ overweight of an unlikely event such as the gain deriving from the extraction of a single high prize assigned randomly at the end of all the treatments to one individual among the sub-group of players that choose to contribute at least the prescribed amount to the public good. I present a model that exploiting this regularity in economic decision making and endogenizing the probability of winning the final prize could increase the level of contribution to the public good without additional expenditure. Then I test this theoretical prediction setting up a controlled laboratory experiment. |
| Date: | 2012–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:ris:aiccon:2012_109&r=cbe |
| By: | Meyer, Wiebke; Mollers, Judith; Buchenrieder, Gertrud |
| Abstract: | This paper approaches the migrant’s motivation to remit from a new, behavioural perspective. We apply the well-established Theory of Planned Behaviour (TPB) using a structural equation model for the first time for this specific research question. Our micro-dataset stems from a 2009/10 survey, covering Albanian migrants from Kosovo living in Germany as well as their home-country households. More than 90% of Kosovar migrants living in Germany remit. However, little is known about their underlying motivations. Our analytical results show that the migrant’s attitude and norms are decisive for the remitting behaviour. The common socio-economic approach lacks explanatory power backed by theory. |
| Keywords: | Kosovo, Germany, remittances, structural equation modelling, Theory of Planned Behaviour, Consumer/Household Economics, Institutional and Behavioral Economics, Political Economy, F24, H30, O15, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:126428&r=cbe |
| By: | Siegfried K. Berninghaus (Karlsruhe Institute of Technology, Institute for Economic Theory and Statistics); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Stephan Schosser (University of Magdeburg, Chair of Empirical Economics) |
| Abstract: | Bounded rationality questions backward induction, which however, does not exclude such reasoning when anticipation is easy. In our stochastic (alternating offer) bargaining experiment, there is a certain first-period pie and a known finite deadline. What is uncertain (except for the final period) is whether there is a further period. Whereas backward induction requires information about all later pie sizes and probabilities, forward reasoning is expected to consider only the immediate prospects. Rather than relying only on decision data, we try to assess the cognitive approach such as forward reasoning of backward induction by control of information retrieval. We find that participants who begin with the shortest games before playing possibly longer games, initially resort to backward induction before switching to forward-looking behavior. |
| Keywords: | backward induction, forward reasoning, bargaining |
| JEL: | C70 C72 C91 |
| Date: | 2012–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2012-041&r=cbe |
| By: | Schubert, Manuel; Graf Lambsdorff, Johann |
| Abstract: | Psychology has inspired economics to recognize intentions in addition to outcomes as being relevant for utility and behavior. Reciprocal behavior, in particular, has been related to the kindness of chosen actions and how kindness can be derived from the benefits obtained in unchosen alternatives. This study shows that a richer understanding of kindness is required. We carry out ultimatum games with a reduced space of strategies and observe that subjects refrain from negative reciprocity (rejecting proposals) if an unchosen alternative was costly to the proposer. Second, we find proposers to anticipate this behavior. Not only the benefits are relevant for assessments of kindness, the costs of kindness matter as well. -- |
| Keywords: | intentions,reciprocity,fairness |
| JEL: | C70 C91 D63 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:upadvr:v6412&r=cbe |
| By: | Tonin, Mirco (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Vlassopoulos, Michael (Associazione Italiana per la Cultura della Cooperazione e del Non Profit) |
| Abstract: | Contributing to a social cause can be an important driver for workers in the public and non-profit sector as well as in firms that engage in Corporate Social Responsibility activities. This paper compares the effectiveness of social incentives to financial incentives using an online real effort experiment. We find that social incentives lead to a 20% rise in productivity, regardless of their form (lump sum or related to performance) or strength. When subjects can choose the mix of incentives half sacrifice some of their private compensation to increase social compensation, with women more likely than men. Furthermore, social incentives do not attract less productive subjects, nor subjects that respond more to exogenously imposed social incentives. Our calculations suggest that a dollar spent on social incentives is equivalent to increasing private compensation by at least half a dollar. |
| Keywords: | private incentives; social incentives; sorting; prosocial behavior; real effort experiment; corporate social responsibility; gender |
| JEL: | D64 J24 J32 L30 M14 M52 |
| Date: | 2012–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:ris:aiccon:2012_112&r=cbe |
| By: | Erik O. Kimbrough (Simon Fraser Unviersity); Alexander Vostroknutov (Maastricht University) |
| Abstract: | Rules are thought to persist to the extent that the direct benefits of having them (e.g. reduced transactions costs) exceed the costs of enforcement and of occasional misapplications. We argue that a second crucial role of rules is as screening mechanisms for identifying cooperative types. Thus we underestimate the social value of rules when we consider only their instrumental value in solving a particular problem. We demonstrate experimentally that costly rule-following can be used to screen for conditional cooperators. Subjects participate in a rule-following task in which they may incur costs to follow an arbitrary written rule in an individual choice setting. Without their knowledge, we sort them into groups according to their willingness to follow the rule. These groups then play repeated public goods or trust games. Rule-following groups sustain high public goods contributions over time, but in rule-breaking groups cooperation decays. Rulefollowers also reciprocate more in trust games. However, when individuals are not sorted by type, we observe no differences in the behavior of rule-followers and rule-breakers. |
| Keywords: | experimental economics, rules, social dilemmas, cooperation |
| JEL: | C91 C92 D70 D03 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp12-15&r=cbe |
| By: | Gerasimou, Georgios |
| Abstract: | This paper proposes a model of individual choice that does not assume completeness of the decision maker's preferences. The model helps explain in a natural way, and within a unied framework of choice in the presence of preference-incomparable options, three distinct behavioural phenomena: the asymmetric dominance/attraction effect, choice deferral and status quo bias. A decision maker who follows the decision rule featured in the model chooses an alternative from a menu if it is totally preference-undominated in that menu and at the same time is also partially preference-dominant. In situations where the decision maker's preferences are complete the model delivers strict utility maximisation. |
| Keywords: | Attraction Effect; Choice Deferral; Status Quo Bias; Incomplete Preferences; Bounded Rationality |
| JEL: | D03 D11 D01 |
| Date: | 2012–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40097&r=cbe |
| By: | Olaf Hübler |
| Abstract: | This paper examines the question of whether risk aversion of prime-age workers is negatively correlated with human height to a statistically significant degree. A variety of estimation methods, tests and specifications yield robust results that permit one to answer this question in the affirmative. Hausman-Taylor panel estimates, however, reveal that height effects disappear if personality traits and skills, parents’ behaviour, and interactions between environment and individual abilities appear simultaneously. Height is a good proxy for these influences if they are not observable. Not only one factor but a combination of several traits and interaction effects can describe the time-invariant individual effect in a panel model of risk attitude. |
| Keywords: | height; risk preference |
| JEL: | D90 J13 J24 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp457&r=cbe |
| By: | Dur, R.; Vollaard, B.A. (Tilburg University, Tilburg Law and Economics Center) |
| Abstract: | Abstract: Field-experimental studies have shown that people litter more in more littered environments. Inspired by these findings, many cities around the world have adopted policies to quickly remove litter. While such policies may avoid that people follow the bad example of litterers, they may also invite free-riding on public cleaning services. This paper reports the results of a natural field experiment where, in a randomly assigned part of a residential area, the frequency of cleaning was reduced from daily to twice a week during a three-month period. Using high-frequency data on litter at treated and control locations before, during, and after the experiment, we find strong evidence that litter begets litter. However, we also find evidence that some people start to clean up after themselves when public cleaning services are diminished. |
| Keywords: | littering;public services;free-riding;field experiment. |
| JEL: | C93 H40 K42 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:2012024&r=cbe |