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on Cognitive and Behavioural Economics |
| By: | Charness, Gary; Grieco, Daniela |
| Abstract: | Creativity is a complex and multi-dimensional phenomenon that has hardly been considered byeconomists, despite a great deal of economic importance. This paper presents a series ofexperiments where subjects face creativity tasks where, in one case, ex-ante goals and constraintsare imposed on their answers, and in the other case no restrictions apply. The effects of financialincentives in stimulating creativity in both types of tasks is then tested, together with the impactof personal features like risk and ambiguity aversion. Our findings show that, in general,financial incentives affect “in-box†(constrained) creativity, but do not facilitate “blue skyâ€(unconstrained) creativity. However, in the latter case incentives do play a role for ambiguityaverseagents, who tend to be significantly less creative and seem to need extrinsic motivation toexert effort in a task whose odds of success they don’t know. We do find that measures ofcreative style, sensation-seeking preferences, and past involvement in artistic endeavors arerelated to our creativity score, but do not find any difference across gender for either form ofcreativity. |
| Keywords: | Economics, creativity, incentives, ambiguity, constraints, ex-ante goals |
| Date: | 2013–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsbec:qt4mr6p1d5&r=cbe |
| By: | Matthew W. McCarter (Argyros School of Business and Economics, Chapman University); Anya C. Samak (School of Human Ecology, University of Wisconsin-Madison); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University) |
| Abstract: | It is common in organizational life to be simultaneously involved in multiple collective actions. These collective actions may be modeled using public good dilemmas. The developing social dilemma literature has two perspectives – the “divided loyalties” and “conditional cooperation” perspectives – that give opposite predictions about how individuals will behave when they simultaneously play two identical public good games. The current paper creates consensus between these social dilemma perspectives by examining cooperative behavior of participants interacting in two public good games with either different or the same group members. In each round, individuals have a common budget constraint across the two games. In support of the conditional cooperator’s perspective of social dilemmas, we find that playing two games with different, rather than same, group members increases overall contributions. Over the course of the experiment, participants playing two games with different group members shift their contributions significantly more often toward more cooperative public good games than participants playing with the same group members. |
| Keywords: | cooperation, conditional cooperation, public good, experiments, group composition |
| JEL: | C72 C73 C91 D03 H41 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-08&r=cbe |
| By: | Carlsson, Fredrik (University of Gothenburg); Daruvala, Dinky (Dept. of Economics); Jaldell, Henrik (Dept. of Economics) |
| Abstract: | A stated preference survey was used to investigate the potential discrepancy between the priorities of public administrators and the general public regarding risk reductions. Both groups of respondents were asked to assume the role of a public policy-maker and choose between different public safety projects. We investigate differences in three areas: (i) large vs. small accidents, (ii) actual vs. subjective risk, and (iii) the trade-off between avoiding fatalities and serious injuries for different age groups and accidents. We find only minor differences between the responses of administrators and the general public, the most important of which is the difference in priorities between reducing the risk of many small or one large accident. In this area the most common response from the general public is that they prefer avoiding many small accidents rather than one large accident while among the administrators there is almost an equal split between the two options. |
| Keywords: | accidents; risk; policy making; stated preference |
| JEL: | D61 I18 |
| Date: | 2013–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:kaunek:0007&r=cbe |
| By: | Kohsaka Youki (Center for Finance Research, Waseda University); Grzegorz Mardyla (Faculty of Economics, Kinki University); Shinji Takenaka (Japan Center for Economic Research); Yoshiro Tsutsui (Graduate School of Economics, Osaka University) |
| Abstract: | We experimentally investigate the existence of and possible origin of the disposition effect. Our approach has three distinct characteristics: Firstly, we created an experimental environment that closely mimics a real stock market and were thus able to obtain and analyze trading behavior data that accurately depicts actual individual investor trading behavior. Secondly, based on a questionnaire survey we conducted during the experiment, we were able to pinpoint each individual participantfs reference point. This, in effect, allowed us to verify an independent hypothesis of the existence of the disposition effect. such an approach differs from the extant literature, where only a joint hypothesis has been examined so far. Thirdly, we measured individual loss aversion coefficients and directly tested whether loss aversion is a cause of the disposition effect. Our results indicate both the existence of the disposition effect as well as prospect theoryfs loss aversion being one of its sources. |
| Keywords: | disposition effect, loss aversion, investor behavior, experimental economics |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1302&r=cbe |
| By: | Weng, Qian (Department of Economics, School of Business, Economics and Law, Göteborg University); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | Common identity and peer punishment have been identified as important means to reduce free riding and to promote cooperation in teamwork settings. This paper examines the relative importance of these two mechanisms, as well as the importance of income distribution in team cooperation. In a repeated public good experiment, conditions vary among different combinations of homogenous or heterogeneous endowment, strong or weak identity, and absence or presence of peer punishment. We find that without punishment, strong identity can counteract the negative impact of endowment heterogeneity on cooperation. Moreover, punishment increases cooperation irrespective of income distribution and identity strength, and cooperation is similar across all treatments with punishment. These findings provide important implications for management policy makers in organizations: implementing ex ante income heterogeneity within teams should be done with caution, and a very strong peer punishment mechanism is more effective in enhancing cooperation over common identity when both are viable.<p> |
| Keywords: | Endowment distribution; identity; punishment; cooperation; public goods experiment |
| JEL: | C91 D63 H41 M54 |
| Date: | 2013–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0551&r=cbe |
| By: | Spiros Bougheas (School of Economics, University of Nottingham); Jeroen Nieboer (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham) |
| Abstract: | We investigate experimentally the effect of consultation (unincentivized advice) on choices under risk in an incentivized investment task. We compare these choices to two benchmark treatments: one with isolated individual choices, and a second with group choice after communication. Our benchmarking treatments replicate earlier findings that groups take more risk than individuals in the investment task . In our consultation treatments we find evidence of peer effects: there is significant correlation of decisions within the peer group. However, average risk taking is not significantly different from the benchmark treatment with isolated individual choices. This latter result underlines the importance of payoff-commonality for bringing about higher risk-taking in groups. |
| Keywords: | experimental economics, choice under risk, advice, social influence, peer effects |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2013-01&r=cbe |
| By: | Bezu, Sosina (School of Economics and Business Norwegian University of Life Sciences); Holden, Stein T. (School of Economics and Business Norwegian University of Life Sciences) |
| Abstract: | Field experiments combining dictator games with stated preference questions are used to elicit within subject and between subject sharing behavior with known family members and anonymous villager. A simple theoretical model incorporating social preferences, social distance and inter-dependent preferences is developed. The results show that generosity in form of probability of giving and amounts given are much lower towards anonymous villagers than to known family members. The probability of giving to the spouse is positively correlated with probability of giving to anonymous villager. Husbands and wives receiving positive amounts from their spouses (without knowing), were also more likely to give positive amounts to their spouses than those that received nothing from their spouses. Receiving positive amounts from spouse was uncorrelated with giving behavior towards anonymous villager. How sharing behavior is correlated with marriage type (parental arrangement, parental and bride agreement, love marriage, and kidnapping marriage), and other socioeconomic characteristics was assessed separately for husbands and wives to explore the sensitivity of responses to such socio-economic characteristics. |
| Keywords: | Generosity; social distance; within-family generosity |
| JEL: | C93 D03 O12 |
| Date: | 2013–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsclt:2013_001&r=cbe |
| By: | Brice Corgnet; Roberto Hernán; Praveen Kujal; David Porter |
| Abstract: | Can “house money” explain asset market bubbles? We test this hypothesis in an asset experiment with a certain dividend cash and shares is given to subjects initial portfolios are constructed using subject that bubbles still occur; however trading volumes are significantly abated and the dispersion of earnings is significantly lower when subjects earn their starting endowments. We investigate the role of cognitive ability in accounting for the differences in earnings distribution across treatments by using the Cognitive Reflection Test (CRT). We find that high CRT subjects earned more money on average than the initial value of their portfolio while low CRT subjects earned less. Subjects with low CRT scores were net purchasers (sellers) of shares when the price was above (below) fundamental value while the opposite was true for subjects with high CRT scores. |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we1304&r=cbe |
| By: | Charness, Gary; Masclet, David; Villeval, Marie Claire |
| Abstract: | Unethical behavior within organizations is not rare. We investigate experimentallythe role of status-seeking behavior in sabotage and cheating activities aiming at improving one’sperformance ranking in a flat-wage environment. We find that average effort is higher whenindividuals are informed about their relative performance. However, ranking feedback alsofavors disreputable behavior. Some individuals do not hesitate to incur a cost to improve theirrank by sabotaging others’ work or by increasing artificially their own performance. Introducingsabotage opportunities has a strong detrimental effect on performance. Therefore, rankingincentives should be used with care. Inducing group identity discourages sabotage among peersbut increases in-group rivalry. |
| Keywords: | Economics, Status, ranking, feedback, sabotage, doping, competitive preferences, experiment |
| Date: | 2013–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsbec:qt3858888w&r=cbe |
| By: | Nekby, Lena (Department of Economics, Stockholm University); Skogman Thoursie, Peter (IFAU - Institute for Evaluation of Labour Market and Education Policy); Vahtrik, Lars (Department of Economics, Stockholm University) |
| Abstract: | A unique examination strategy in first year microeconomics courses is used to test for gender differences in preferences in examination behavior. Students have the possibility of attaining a seminar bonus on the final exam for near-perfect seminar attendance and are given two voluntary initial quizzes during the semester. At the final exam, the scores received on initial quizzes can either be accepted as is, or students can attempt to improve their marks by answering similar quiz questions on the exam. Results suggest that female students are more likely to take initial quizzes and receive a seminar bonus but are less likely to re-take quiz-questions on the final exam. These results suggest higher risk aversion among female students relative to male students, behavioral differences with tangible implications in terms of final grades on the course. |
| Keywords: | Gender; preferences; risk aversion; overconfidence |
| JEL: | A12 A14 J16 |
| Date: | 2013–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2013_001&r=cbe |
| By: | Maria De Paola; Francesca Gioia (Dipartimento di Scienze Economiche, Statistiche e Finanziarie, Università della Calabria) |
| Abstract: | In a simple theoretical model we show that impatience affects academic performance through two different channels: impatient students spend less effort in studying activities and set less ambitious objectives in terms of grades at exams. As a consequence, the relationship between impatience and academic success may vary according to how performance is measured. Using data from a sample of Italian undergraduate students, we find a strong negative relationship between impatience and both the average grade at exams and the probability of graduating with honours. Conversely, a negative but not statistically significant correlation emerges between time preferences and both the number of credits earned in the three years following enrolment and the probability of timely graduation. Our findings are robust to alternative measures of impatience and controlling for family background characteristics, for cognitive abilities and for risk preferences. |
| Keywords: | Time preferences, impatience, human capital, academic success |
| JEL: | I20 D03 D91 J01 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:clb:wpaper:201302&r=cbe |
| By: | Maria De Paola; Francesca Gioia; Vincenzo Scoppa (Dipartimento di Scienze Economiche, Statistiche e Finanziarie, Università della Calabria) |
| Abstract: | We analyze how overconfidence is affected by superstitious beliefs and emotions induced by positive and negative stimuli in a field experiment involving about 700 Italian students who were randomly assigned to numbered seats in their written examination sessions. According to widespread superstitions, some numbers are considered lucky, while others are considered unlucky. At the end of the examination, we asked students the grade they expected to get. We find that students tend to be systematically overconfident and that their overconfidence is positively affected by being assigned to a lucky number. Interestingly, males and females react differently: on the one hand, females tend to expect lower grades when assigned to unlucky numbers, while they are not affected by being assigned to lucky numbers. On the other hand, males are not affected by being assigned to unlucky numbers but expect higher grades when assigned to lucky numbers. |
| Keywords: | Expectations, Grade, Overconfidence, Emotions, Superstition |
| JEL: | D01 D83 D03 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:clb:wpaper:201303&r=cbe |