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on Cognitive and Behavioural Economics |
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Issue of 2016‒09‒18
ten papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Johannes Abeler (University of Oxford, IZA and CESifo); Daniele Nosenzo (University of Nottingham, School of Economics); Collin Raymond (Amherst College) |
| Abstract: | We study information conditions under which individuals are willing to delegate their sanctioning power to a central authority. We design a public goods game in which players can move between institutional environments, and we vary the observability of others' contributions. We find that the relative popularity of centralized sanctioning crucially depends on the interaction between the observability of the cooperation of others and the absence of punishment targeted at cooperative individuals. While central institutions do not outperform decentralized sanctions under perfect information, large parts of the population are attracted by central institutions that rarely punish cooperative individuals in environments with limited observability. |
| Keywords: | centralized sanctions, cooperation, experiment, endogenous institutions |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2016-13&r=cbe |
| By: | Vittorio Pelligra (University of Cagliari); Tommaso Reggiani (LUMSA University); Daniel John Zizzo (Newcastle University Business School) |
| Abstract: | We consider the notions of static and dynamic reasonableness of requests in a trust game experiment. We vary systematically the experimental norm of what is expected from trustees to return to trustors, both in terms of level of each request and in terms of sequence of the requests. Static reasonableness matters in a self-biased way, in the sense that low requests justify returning less but high requests tend to be ignored. Dynamic reasonableness also matters, in the sense that, if requests keep increasing, trustees return less than if requests of different size are presented in random or decreasing order. Requests never systematically increase trustworthiness, but may decrease it. |
| Keywords: | trust; trustworthiness; norms; reasonableness; moral wiggle room; moral licensing |
| JEL: | C91 D01 D03 D63 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:lsa:wpaper:wpc13&r=cbe |
| By: | Daniela Di Cagno (LUISS, Rome); Werner Gürth (LUISS, Rome; Max Planck Institute for Research on Collective Goods, Bonn; Frankfurt Business School); Noemi Pace (Ca’ Foscari University of Venice, Department of Economics; LUISS, Rome); Francesca Marzo (LUISS, Rome) |
| Abstract: | A risky choice experiment is based on one-dimensional choice variables and risk neutrality induced via binary lottery incentives. Each participant confronts many parameter constellations with varying optimal payoffs. We assess (sub)optimality, as well as (non)optimal satisficing, partly by eliciting aspirations in addition to choices. Treatments differ in the probability that a binary random event, which are payoff- but not optimal choice–relevant, is experimentally induced and whether participants choose portfolios directly or via satisficing, i.e., by forming aspirations and checking for satisficing before making their choice. By incentivizing aspiration formation, we can test satisficing, and in cases of satisficing, determine whether it is optimal. |
| Keywords: | (un)Bounded Rationality, Satisficing, Risk, Uncertainty, Experiments |
| JEL: | D03 D81 C91 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2016:22&r=cbe |
| By: | Kara Contreary; Irma Perez-Johnson |
| Abstract: | Behavioral science draws on insights from psychology and other social sciences to study how cognitive, social, and emotional factors contribute to individual decision making. |
| Keywords: | disability, employment, return-to-work, behavioral intervention |
| JEL: | I J |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:eb0866503867465fa23f3b394992239c&r=cbe |
| By: | Dezső, Linda; Steinhart, Jonathan; Bakó, Barna; Kirchler, Erich |
| Abstract: | Focusing illusion describes how, when making choices, people may put disproportionate attention on certain attributes of the options and hence, causing those options to be overvalued. For instance, in deciding whether or not to take out a loan, people may focus more on getting the loan than on its small and dispersed costs. Building on recent literature on focusing illusion in economic choice, we theoretically propose and empirically test that focusing illusion can be advantageously exploited such that attention is put back on the ignored attributes. To demonstrate this, we use hypothetical loan decisions where people choose between loans with different repayment plans to finance a purchase. We show that when adding a steeply decreasing-installments plan to the original choice set of not borrowing or borrowing under a fixed-installments plan, the preference for the fixed-installments plan is lessened. This is because preference for the fixed-installments plan shifted towards not borrowing. We discuss potential applications of our results in designing choice sets of intertemporal sequences. |
| Keywords: | focusing illusion, focus-weighted utility, loan decisions, intertemporal choice |
| JEL: | D03 D91 |
| Date: | 2016–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:2016/11&r=cbe |
| By: | Andreas Nicklisch (University of Hamburg and German Research Foundation); Kristoffel Grechenig (Max Planck Institute for Research on Collective Goods, Bonn); Christian Thoeni (Univesity of Lausanne) |
| Abstract: | We study information conditions under which individuals are willing to delegate their sanctioning power to a central authority. We design a public goods game in which players can move between institutional environments, and we vary the observability of others' contributions. We find that the relative popularity of centralized sanctioning crucially depends on the interaction between the observability of the cooperation of others and the absence of punishment targeted at cooperative individuals. While central institutions do not outperform decentralized sanctions under perfect information, large parts of the population are attracted by central institutions that rarely punish cooperative individuals in environments with limited observability. |
| Keywords: | centralized sanctions, cooperation, experiment, endogenous institutions |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2016-12&r=cbe |
| By: | David B. Johnson (Department of Economics, Finance, and Marketing, University of Central Missouri); Matthew D. Webb (Department of Economics, Carleton University) |
| Abstract: | Little is known about how individuals make decisions when they must choose several options from a set of options when the outcomes are risky and the payoffs are rival. When researchers model these decisions, they assume people maximize their expected utility. We design an experiment in which subjects face either rival or independent payoffs. While theory predicts different behavior, subjects behave nearly identically under these payoff schemes. This suggests individuals are not maximizing expected utility. Additional treatments demonstrate that this behavior is likely driven by a heuristic used to simplify a complex math problem, rather than a preference for lotteries with the highest independent expected utilities. Our results suggest that using expected utility as peoples' objective function in these types of environments will lead to biased predictions. |
| Keywords: | decision making, risk, rival, online experiment |
| JEL: | C90 D01 D81 |
| Date: | 2016–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:16-12&r=cbe |
| By: | Alessandro Innocenti |
| Abstract: | The paper provides a review of research using virtual reality as a tool in experimental economics. It addresses the question of whether behavior in virtual environments is a valuable source of empirical evidence for economists. A typology of virtual reality experiments based on the difference between low-immersive (LIVE) and high-immersive virtual environments (HIVE) is offered. It is argued that virtual reality experiments are framed field experiments, which allow testing the effect of contextual cues on economic decision-making under the strict control of the experimenter. This feature enhances replicability and attenuates the context-free illusion that represents an important limitation of the standard laboratory approach in economics. |
| Keywords: | virtual reality, experimental economics, laboratory methods, virtual worlds, immersive environments. |
| JEL: | B41 C90 C93 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:usi:labsit:049&r=cbe |
| By: | Bartuli, Jenny (Continental AG); Djawadi, Behnud Mir (University of Paderborn); Fahr, René (University of Paderborn) |
| Abstract: | The present paper suggests an innovative experimental design to study the nature and occurrence of whistleblowing in an employee-organization context. In particular, we aim at identifying whether student subjects in the role of employees are willing to blow the whistle on their managers' decisions to withhold money that is destined for a charitable purpose. Since the sole act of reporting leads to negative financial consequences for both players, the employee faces a conflict between ethical considerations and monetary interests. Of the 111 employee-manager pairings, 88 managers misappropriate the donation funds and 33 employees blow the whistle on their managers' fraudulent behaviors. We use different scales of the HEXACO and the DOSPERT personality inventory to link measures of personality traits to actual behavior which enables us to identify specific characteristics that distinguish whistleblowers from silent observers. We find that the Honesty-Humility factor scale is a strong predictor for whistleblowing. Further, employees who are more altruistic and more aware of ethical issues are more likely to refrain from supporting fraud and report wrongdoing. With the foci on research exploring individual and situational antecedents of whistleblowing, our experimental design offers researchers a new approach to studying organizational behavior of ethical scope under controlled and incentive-compatible conditions. |
| Keywords: | whistleblowing, fraud, organizational wrongdoing, social norms, experimental economics, laboratory experiment |
| JEL: | C91 I11 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10190&r=cbe |
| By: | Hicham Ezzat (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Marine Agogué (HEC Montréal - HEC MONTRÉAL); Mathieu Cassotti (LaPsyDE - Laboratoire de Psychologie du Développement et de l'Education de l'enfant - UNICAEN - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique - UPD5 - Université Paris Descartes - Paris 5, CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Benoit Weil (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Leadership and creativity have usually been viewed as antagonist concepts, compromised between two contradictory variables: control and freedom. There is growing evidence that too much leadership control could kill subordinates’ creativity, while in contrary too much freedom could lead them to chaos and disorder. In the past decades, countless researches suggested that in order for creativity to emerge, leaders should grant more freedom and autonomy to their followers. Our hypothesis is that leaders could foster subordinates’ creative ideation capacities by controlling their ideation processes through directive feedbacks. In this study, we explored the influence of directive feedbacks interactively given by a leader at each idea generated by his/her subordinate, throughout a classical creative problem-solving task done online via a distant text conversation. The task consisted of generating as many original solutions as possible that allows that a hen’s egg dropped from a height of ten meters does not break. Results confirmed that leaders’ directive feedbacks were able to drive and guide subordinates’ ideation paths in two distinctive directions, according to leaders’ domain-relevant knowledge and vision for creativity. |
| Keywords: | Leadership, Creativity, Ideation, Functional Fixedness, Directive Feedback |
| Date: | 2016–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01298791&r=cbe |