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on Cognitive and Behavioural Economics |
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Issue of 2015‒12‒01
nine papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale “Amedeo Avogadro” |
| By: | Maltz, Amnon (Department of Economics, University of Haifa); Romagnoli, Giorgia (New York University) |
| Abstract: | We conduct an experiment to determine the effect of ambiguity on status quo bias. We find no evidence of the bias in the absence of ambiguity and when ambiguity is present both in the status quo option and the alternative. We do find evidence for status quo bias under asymmetric presence of ambiguity, i.e. when the status quo option is non-ambiguous and the alternative is, or when the status quo option is ambiguous and the alternative is not. These findings are not predicted by the existing models of choice with initial endowment, such as the loss aversion model by Kahneman and Tversky (1979) and the incomplete preferences model by Bewley (1986). Our results, combined with the evidence from the endowment effect literature, suggest that dissimilarity between options may be an important determinant of the status quo bias. |
| Keywords: | Status Quo Bias, Risk, Ambiguity, Reference Effects. |
| JEL: | C91 D11 D81 |
| Date: | 2015–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:haf:huedwp:wp201505&r=cbe |
| By: | Junyi Shen (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Hiromasa Takahashi (Faculty of International Studies, Hiroshima City University) |
| Abstract: | In this study, we conducted a simple self-control investment experiment to investigate the tangibility effect of paper money and coin. We found that, compared to the non-cash condition, physically holding either paper money or coin made subjects significantly less likely to participate in the investment experiment and those who did participate invested significantly less. In addition, an aversion towards coins in small investments and a gender difference in investment decision were found. |
| Keywords: | Tangibility effect, Paper money, Coin, Experiment |
| JEL: | C91 D03 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2015-41&r=cbe |
| By: | L. Becchetti; V. Pelligra; S.F. Taurino |
| Abstract: | We measure satisfaction about experimental outcomes, personal and other participants’ behaviour after a multiperiod ‘hybrid contribution’ multiplayer prisoner’s dilemma (the Vote-with-the-Wallet game). Our work shows that participants who cooperated above median (which we define as strong cooperators) are significantly more satisfied with the game in proportion to their cooperative choice, irrespective of the material pay- off they obtain. On the contrary, their satisfaction for the other players’ behavior is negatively correlated with the extent of their own cooperative behavior and the non-cooperative behavior of the latter. The satisfaction of strong cooperators for their behavior in the game depends in turn on the share of their own cooperative choices. We document that a broader utility function including heterogeneity in expectations on other players’ behavior, other-regarding preferences, and a negative reciprocity argument may account for the combination of the behavioral and self-reported data. |
| Keywords: | Subjective Well-Being, social preferences, Vote-with-the-Wallet, lab experiment |
| JEL: | C72 C92 I31 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201514&r=cbe |
| By: | Maltz, Amnon (Department of Economics, University of Haifa) |
| Abstract: | This paper develops, using the revealed preference approach, a model of choice with an initial endowment and in the presence of alternatives that are grouped into categories. Our model generalizes the classical individual choice model which is rationalized by utility maximization, and reduces to that model in the absence of an initial endowment. Given an exogenous endowment, our decision maker follows a 3-step procedure: First, she identifies the best alternative in the choice set which belongs to the same category as her endowment. This alternative serves as her endogenous reference point which in turn, at the second step, induces a “psychological constraint”. Finally, she chooses the best feasible alternative in her constraint set according to her reference-free utility. The model gives rise to a “category bias” which generalizes the status quo bias by attracting the decision maker towards the endowment’s category but not necessarily towards the endowment itself. It also accommodates recent experimental findings on the absence of status quo bias among goods which belong to the same category. We apply the model to a financial choice problem and show that category bias may lead to a risk premium even with risk neutral agents. |
| Keywords: | Status Quo Bias, Categories, Reference Dependence, Risk Premium, Revealed Preference |
| JEL: | D03 D11 |
| Date: | 2015–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:haf:huedwp:wp201504&r=cbe |
| By: | Klaus Wälde (Johannes-Gutenberg University Mainz and CESifo) |
| Abstract: | Stress is ubiquitous in society. In our model, stressors translate into subjective stress via an appraisal process. Stress reduces instantaneous utility of an individual directly and via a cognitive load argument. Coping can be functional and under the control of the individual or more automatic with dysfunctional features. We predict the occurrence and frequency of uncontrolled coping -emotional outbursts - as a function of an individual's personality and environment. Outbursts cannot always be avoided. Delaying emotional outbursts arti...cially can lead to even more outbursts. Looking at the eect of psychotherapy shows that expecting little and being emotional can help maximizing well-being. |
| Keywords: | Stress, coping, personality, controlled vs. automatic reaction, emotional outbursts, optimal stopping problem |
| JEL: | D03 D91 I12 |
| Date: | 2015–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2015-020&r=cbe |
| By: | Brañas-Garza, Pablo; Kujal, Praveen; Lenkei, Balint |
| Abstract: | We report the results of a meta-study of 118 Cognitive Reflection Test studies comprising of 44,558 participants across 21 countries. There is a negative correlation between being female and the overall,and individual, correct answers to CRT questions. Taking the test at the end of an experiment negatively impacts performance. Monetary incentives do not impact performance. Overall students perform better compared to non-student samples. Exposure to CRT over the years may impact outcomes, however, the effect is driven by online studies. We obtain mixed evidence on whether the sequence of questions matters. Finally, we find that computerized tests marginally improve results. |
| Keywords: | CRT, Experiments, Gender, Incentives, Glucose and Cognition. |
| JEL: | Z00 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68049&r=cbe |
| By: | Noémi Berlin (University of Edinburgh - School of Economics - University of Edinburgh); Jean-Louis Tavani (UP8 - Université Paris 8, Vincennes-Saint-Denis); Maud Beasançon (UP10 - Université Paris 10, Paris Ouest Nanterre La Défense) |
| Abstract: | In this paper, we investigate the link between schooling achievement and creativity scores, controlling for personality traits and other individual characteristics. Our study is based on field data collected in a secondary school situated in a Parisian suburb. Four scores of creativity were measured on 9th graders. Schooling achievement was measured by the test scores obtained by pupils in different subjects. We find that verbal divergent thinking, which is a subtype of creativity, negatively predicts the grades in most subjects, but that graphical integrative thinking is positively correlated with scientific grades.There is no significant correlation with the other measures of creativity, implying a low importance of creativity in school. In line with previous work, we find that conscientiousness and openness are positively associated with grades. Girls have higher grades than boys but do not have a higher probability of passing a national exam. |
| Keywords: | personality traits,Schooling achievement,creativity,eld data |
| Date: | 2015–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01227497&r=cbe |
| By: | Da Silva, Sergio; Matsushita, Raul |
| Abstract: | The St. Petersburg paradox refers to a gamble of infinite expected value, where people are likely to spend only a small entrance fee for it. There is a huge volume of literature that mostly concentrates on the psychophysics of the game; experiments are scant. Here, rather than focusing on the psychophysics, we offer an experimental, “physical” solution as if robots played the game. After examining the time series formed by one billion plays, we: confirm that there is no characteristic scale for this game; explicitly formulate the implied power law; and identify the type of -stable distribution associated with the game. We find an and, thus, the underlying distribution of the game is a Cauchy flight, as hinted by Paul Samuelson. |
| Keywords: | St. Petersburg paradox, alpha-stable distributions, Cauchy flight, power laws |
| JEL: | G00 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68075&r=cbe |
| By: | CHO, IN-KOO (Department of Economics, University of Illinois, USA); Rubinchik, Anna (Department of Economics, University of Haifa) |
| Abstract: | In a search for a positive model of decision-making with observable primitives, we rely on the burgeoning literature in cognitive neuroscience to construct a three-element machine (agent). Its control unit initiates either impulsive or cognitive element to solve a problem in a stationary Markov environment, the element "chosen" depends on whether the problem is mundane or novel, memory of past successes and the strength of inhibition. Our predictions are based on a stationary asymptotic distribution of the memory, which, depending on the parameters, can generate different "characters", e.g., an uptight dimwit, who could succeed more often with less inhibition, as well as a relaxed wise-guy, who could gain more with a stronger inhibition of impulsive (intuitive) responses. As one would expect, stronger inhibition and lower cognitive costs increase the frequency of decisions made by the cognitive element. More surprisingly, increasing the "carrot" and reducing the "stick" (being in a more supportive environment) enhances contemplative decisions (made by the cognitive unit) for an alert agent, i.e., the one who identifies novel problems frequently enough. |
| Keywords: | the two-system decision-making, executive control, inhibition, adaptive learning, stochastic approximation |
| JEL: | D01 |
| URL: | http://d.repec.org/n?u=RePEc:haf:huedwp:wp201503&r=cbe |