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on Cognitive and Behavioural Economics |
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Issue of 2015‒12‒20
thirteen papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale “Amedeo Avogadro” |
| By: | Guillén, Pablo; Hakimov, Rustamdjan |
| Abstract: | We run a field experiment to test the truth-telling rates of the theoretically strategy-proof Top Trading Cycles mechanism (TTC) under different information conditions. First, we asked first-year economics students enrolled in an introductory microeconomics unit about which topic, among three, they would most like to write an essay on. Most students chose the same favorite topic. Then we used TTC to distribute students equally across the three options. We ran three treatments varying the information the students received about the mechanism. In the first treatment students were given a description of the matching mechanism. In the second they received a description of the strategy-proofness of the mechanism without details of the mechanism. Finally, in the third they were given both pieces of information. We find a significant and positive effect of describing the strategy-proofness on truth-telling rates. On the other hand, describing the matching mechanism has a significant and negative effect on truth-telling rates. |
| Keywords: | school choice,matching,field experiment |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2015208&r=cbe |
| By: | Michele Belot (University of Edinburgh); Marina Schroeder (University of Cologne) |
| Abstract: | Are some people more memorable than others? We conduct an experiment in a real work setting - academia. A month after two international conferences, participants are asked to recall presenters' names, institutions and the papers they presented. We find that people recall distinctive "minority" attributes of presenters (such as being female or non-white) and better recall identities of ethnic minorities. In contrast, academic achievements have little explanatory power on the probability of being remembered. These findings provide evidence for a potential value of standing out and have implications for our understanding of the formation of professional networks. |
| Keywords: | memory, discrimination, field experiment |
| JEL: | C93 D83 J15 J16 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:06-06&r=cbe |
| By: | Gaudeul, Alexia; Giannetti, Caterina |
| Abstract: | We study in the laboratory the impact of private information revelation on the selection of partners when forming individual networks. Our experiment combines a "network game" and a "public-good game". In the network game, individuals decide with whom to form a link with, while in the public-good game they decide whether or not to contribute. The variations in our treatments allow us to identify the effect of revealing one´s name on the probability of link formation. Our main result suggests that privacy mechanisms affect partner selection and the consequent structure of the network: when individuals reveal their real name, their individual networks are smaller but their profits are higher. This indicates that the privacy costs of revealing personal information are compensated by more productive links. |
| Keywords: | privacy,social networks,public goods,trust |
| JEL: | D12 D85 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:269&r=cbe |
| By: | Lian Xue (University of East Anglia); Stefania Sitzia (University of East Anglia); Theodore L. Turocy (University of East Anglia) |
| Abstract: | We replicate and extend a simple riskless choice experiment reported recently by Hochman et al. (2014) as supporting loss aversion for money. Participants select from among sets of standard playing cards, with values defined by a simple formula. In some sessions, participants are given a prepayment associated with some of the cards, which need not be the earnings- maximizing ones. We replicate the results of Hochman et al., but find the effect of prepayment is significantly modulated by the instructions; instructions which more explicitly link payments and choices eliminate the effect. Participants who have been in many economics experiments before do not choose differently than those who are relative novices. However, we find that a self-reported measure of confidence in mathematics is a strong predictor of maximization rates. These results are more consistent with a preference for defaults when evaluating alternatives requires cognitive effort. |
| Keywords: | loss aversion, prepayment, replication, mathematics self-confidence, lab rats |
| JEL: | C91 D83 |
| Date: | 2015–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:15-20&r=cbe |
| By: | Dutcher, E. Glenn; Salmon, Timothy C.; Saral, Krista J. |
| Abstract: | In recent years, a growing number of studies have researchers opting to use "real" effort designs for laboratory experiments where subjects complete an actual task to exert effort rather than using what is perhaps a more traditional design of stylized effort where subjects simply choose an effort level from a pre-defined set. The commonly argued reason for real effort is that it makes the results more generalizable and field relevant. Some researchers go further and make a distinction between trivial and useful real effort, i.e. whether the task is only relevant for the experiment or if it leads to tangible production for some purpose outside of the experiment, and claim that the useful effort model is even more likely to be generalizable. We present an experiment designed to test whether these three modes of effort, stylized, trivial, and useful, have any impact on behavior in a public goods setting. We find that all three forms of effort lead to identical decision making and then discuss how these results help to inform us about the use of real effort in laboratory experiments. |
| Keywords: | Real Effort, Stylized Effort, Abstract Effort, Economics Experiments, Public Goods |
| JEL: | C9 C91 H41 |
| Date: | 2015–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68394&r=cbe |
| By: | Habib, Sameh; Friedman, Daniel; Crockett, Sean; James, Duncan |
| Abstract: | We introduce new graphical displays that present binary choice lotteries via three dimensional rotating pie charts whose heights represent the prize amounts. We compare four graphical versions to the original text-only Holt & Laury (2002) multiple price list. Parametric and non-parametric measures of risk preferences are found to shift towards risk neutrality for the graphical displays. |
| Keywords: | Multiple Price List,Elicitation,Risk Aversion,Experiment |
| JEL: | C91 D81 D89 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmdn:spii2015501&r=cbe |
| By: | David Hugh-Jones (University of East Anglia) |
| Abstract: | The honesty of resident nationals of 15 countries was measured in two experiments: reporting a coin flip with a reward for "heads", and an online quiz with the possibility of cheating. There are large differences in honesty across countries. Average honesty correlates with per capita GDP: this relationship is driven mostly by GDP differences arising before 1950, rather than by GDP growth since 1950, suggesting that the growth-honesty relationship was more important in earlier periods than today. The experiment also elicited participants' beliefs about honesty in different countries. Beliefs were not correlated with reality. Instead they appear to be driven by cognitive biases, including self-projection. |
| Date: | 2015–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2015_01&r=cbe |
| By: | Joao da Gama Batista; Domenico Massaro; Jean-Philippe Bouchaud; Damien Challet; Cars Hommes |
| Abstract: | We run experimental asset markets to investigate the emergence of excess trading and the occurrence of synchronised trading activity leading to crashes in the artificial markets. The market environment favours early investment in the risky asset and no posterior trading, i.e. a buy-and-hold strategy with a most probable return of over 600%. We observe that subjects trade too much, and due to the market impact that we explicitly implement, this is detrimental to their wealth. The asset market experiment was followed by risk aversion measurement. We find that preference for risk systematically leads to higher activity rates (and lower final wealth). We also measure subjects' expectations of future prices and find that their actions are fully consistent with their expectations. In particular, trading subjects try to beat the market and make profits by playing a buy low, sell high strategy. Finally, we have not detected any major market crash driven by collective panic modes, but rather a weaker but significant tendency of traders to synchronise their entry and exit points in the market. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1512.03743&r=cbe |
| By: | David Hugh-Jones (University of East Anglia) |
| Abstract: | I report on the validity of different measures of honest behaviour. Subjects from 15 countries took part in two web-based experiments: a coin flip with a reward for reporting "heads", and a quiz with the possibility of cheating. Participants also answered questions on moral attitudes, and on unethical real world behaviour. Honesty in the two experiments was correlated, and correlated with self-reports of behaviour. Answers to the attitudes questions did not correlate with the experimental measures or self-reported behaviour. The quiz experiment provides a useful way to measure individual honesty in an online setting. |
| Keywords: | honesty, lying, experiment, questionnaire |
| JEL: | D82 C93 C42 Z13 |
| Date: | 2015–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2015_02&r=cbe |
| By: | Natalia Borzino (University of East Anglia); Enrique Fatas (University of East Anglia); Emmanuel Peterle (University of Gottingen) |
| Abstract: | We conduct a controlled laboratory experiment to investigate trust and trustworthiness in a networked investment game in which two senders interact with a receiver. We investigate to what extent senders and receivers comply with an exogenous and non-binding recommendation. We also manipulate the level of information available to senders regarding receiver’s behavior in the network. We compare a baseline treatment in which senders are only informed about the actions and outcomes of their own investment games to two information treatments. In the reputation treatment, senders receive ex ante information regarding the average amount returned by the receiver in the previous period. In the transparency treatment, each sender receives ex post additional information regarding the returning decision of the receiver to the other sender in the network. Across all treatments and for both senders and receivers, the non-binding rule has a significant and positive impact on individual decisions. Providing senders with additional information regarding receiver’s behavior affects trust at the individual level, but leads to mixed results at the aggregate level. Our findings suggest that reputation building, as well as allowing for social comparison could be efficient ways for receivers to improve trust within networks. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:15-21&r=cbe |
| By: | David Hugh-Jones (University of East Anglia); Carlo Perroni (University of Warwick) |
| Abstract: | We examine why heterogeneous communities may fail to provide public goods. Current work characterizes sanctioning free-riders as an undersupplied public good. We argue that often free-riders can be punished by the coordinated action of a group. This punishment can be profitable, and need not be undersupplied. But the power to expropriate defectors can also be used to expropriate outgroups. Heterogeneous societies may be inefficient because minorities, rather than free-riders, are expropriated. Even if this is not so, groups' different beliefs about the reasons for expropriation may make the threat of punishment less effective at preventing free-riding. We illustrate our theory with evidence from California mining camps, contemporary India, and US schools. In a public goods experiment using minimal groups and a profitable punishment institution, outgroups were more likely to be punished, and reacted differently to punishment than ingroup members. |
| Keywords: | group coercion, social heterogeneity |
| JEL: | H1 H4 N4 D02 |
| Date: | 2015–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaeco:2015_04&r=cbe |
| By: | Brook, Rebecca; Servátka, Maroš |
| Abstract: | Is nonverbal communication capable of affecting economic outcomes? We study the effect of anticipated approval and disapproval, expressed through emoticons, on generosity and show that it discourages selfish behavior. In our experiment subjects play a one-shot dictator game at the end of which the recipient can respond to the allocation by drawing an emoticon and sending it back to the dictator. While the observed effect of nonverbal communication is somewhat weaker than the anticipation of a verbal response, our results provide evidence that people are willing to trade-off pecuniary gains to avoid disapproval or seek approval of their peers and that the sheer anticipation of receiving a response, even nonverbal, is sufficient to change their behavior. |
| Keywords: | approval, disapproval, nonverbal communication, emotion, experiment, fairness, generosity, dictator game |
| JEL: | C91 D03 D04 D63 |
| Date: | 2015–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68260&r=cbe |
| By: | Iryna Sikora |
| Abstract: | This paper explores how exposure to the ideas of others is embraced in creative-process technology. We report evidence from a two-stage real-effort lab experiment, in which subjects perform creative idea-generation tasks. In the  first stage, we control whether the output of other players is observed; this design allows us to quantify the effect of new ideas on creative productivity. In the second stage, we make ideas costly and elicit the subject's Âwillingness to pay for them. We characterize investment behaviour in this creative environment by comparing expected monetary bene ts from increased productivity to the cost of exposure. Our results show that observing output of others boosts productivity in creative tasks, but only when it discloses previously unknown items and the output of low creative-ability players is not found to be benefi cial. When ideas become costly, subjects do not act in a pro t-maximizing way. We fi nd that they pursue lower costs and systematically overinvest in output of less creative players. This effect is more pronounced for females, risk-averse, more self-confident subjects and those of lower creative ability. As ideas of less creative participants are rarely original, this behaviour does not lead to the highest possible level of creative production in aggregate. |
| JEL: | C91 D03 D24 D61 |
| Date: | 2015–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2015:psi700&r=cbe |