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on Cognitive and Behavioural Economics |
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Issue of 2017‒07‒16
seven papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Damon Clark; David Gill; Victoria Prowse; Mark Rush |
| Abstract: | Will college students who set goals for themselves work harder and achieve better outcomes? In theory, setting goals can help present-biased students to mitigate their self-control problem. In practice, there is little credible evidence on the causal e ects of goal setting for college students. We report the results of two eld experiments that involved almost four thousand college students in total. One experiment asked treated students to set goals for performance in the course; the other asked treated students to set goals for a particular task (completing online practice exams). Task-based goals had large and robust positive e ects on the level of task completion, and task-based goals also increased course performance. Further analysis indicates that the increase in task completion induced by setting task-based goals caused the increase in course performance. We also nd that performance-based goals had positive but small e ects on course performance. We use theory that builds on present bias and loss aversion to interpret our results. Since task-based goal setting is low-cost, scaleable and logistically simple, we conclude that our ndings have important implications for educational practice and future research. |
| Keywords: | Goal; Goal setting; Higher education; Field experiment; Self-control; Present bias; Time inconsistency; Commitment device; Loss aversion; Reference point; Task-based goal; Performance-based goal; Self-set goal; Performance uncertainty; Overcon dence; Student e ort; Student performance; Educational attainment. |
| JEL: | I23 C93 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1293&r=cbe |
| By: | Adrian Hillenbrand (Max Planck Institute for Research on Collective Goods); Fabian Winter (Max Planck Institute for Research on Collective Goods) |
| Abstract: | There is ample evidence that the number of players can have an important impact on the cooperation and coordination behavior of people facing social dilemmas. With extremely few exceptions, the literature on cooperation assumes common knowledge about who is a player and how many players are involved in a certain situation. In this paper, we argue that this assumption is overly restrictive, and not even very common in real-world cooperation problems. We show theoretically and experimentally that uncertainty about the number of players in a Volunteer's Dilemma increases cooperation compared to a situation with a certain number of players. We identify additional behavioral mechanisms amplifying and impairing the effect. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2017_12&r=cbe |
| By: | Ensthaler, Ludwig; Huck, Steffen; Leutgeb, Johannes |
| Abstract: | From the regulation of sports to lawmaking in parliament, in many situations one group of people ("agents") make decisions that affect payoffs of others ("principals") who may offer action-contingent transfers in order to sway the agents' decisions. Prat and Rustichini (2003) characterize pure-strategy equilibria of such Games Played Through Agents. Specifically, they predict the equilibrium outcome in pure strategies to be efficient. We test the theory in a series of experimental treatments with human principals and computerized agents. The theory predicts remarkably well which actions, and outcomes are implemented but subjects' transfer offers deviate systematically from equilibrium. We show how quantal response equilibrium accounts for the deviations and test its predictions out of sample. Our results show that quantal response equilibrium is particularly well suited for explaining behavior in such games. |
| Keywords: | games played through agents,experiment,quantal response equilibrium |
| JEL: | D44 C91 D72 D83 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2016305r&r=cbe |
| By: | Carrera, Mariana (Case Western Reserve University); Royer, Heather (University of California, Santa Barbara); Stehr, Mark (Drexel University); Syndor, Justin (University of Wisconsin-Madison) |
| Abstract: | We conducted a randomized controlled trial testing the effect of modest incentives to attend the gym among new members of a fitness facility, a population that is already engaged in trying to change a health behavior. Our experiment randomized 836 new members of a private gym into a control group, receiving a $30 payment unconditionally, or one of 3 incentive groups, receiving a payment if they attended the gym at least 9 times over their first 6 weeks as members. The incentives were a $30 payment, a $60 payment, and an item costing $30 that leveraged the endowment effect. These incentives had only moderate impacts on attendance during members' first 6 weeks and no effect on their subsequent visit trajectories. We document substantial overconfidence among new members about their likely visit rates and discuss how overconfidence may undermine the effectiveness of a modest incentive program. |
| Keywords: | endowment effect, incentives, exercise, overconfidence |
| JEL: | C93 D3 I12 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10874&r=cbe |
| By: | Jingcheng Fu (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham); Richard Upward (School of Economics, University of Nottingham) |
| Abstract: | Using a laboratory experiment we examine how social comparisons affect behavior in a sequential search task. In a control treatment, subjects search in isolation while in two other treatments subjects get feedback on the search decisions and outcomes of a partner subject. The average level and rate of decline in reservation wages are similar across treatments. Nevertheless, subjects who are able to make social comparisons search differently from those who search in isolation. Within a search task we observe a reference wage effect: when a partner exits, the subject chooses a new reservation wage which is increasing in partner income. We also observe a social learning effect: between search tasks, subjects who have been paired with a more patient and successful partner increase their reservation wages in the next task. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2017-10&r=cbe |
| By: | Maria De Paola; Francesca Gioia; Fabio Piluso (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria) |
| Abstract: | We ran a field experiment to investigate whether nudge policies, consisting in behavioural insight messaging, help to improve performance in financial trading. Our experiment involved students enrolled in a financial trading course in an Italian University who were invited to trade on Borsa Italiana’s virtual platform. Students were randomly assigned to a control group and a treatment group. Treated students received a message reminding them of the existence of behavioural biases in financial trading. We find that treated students significantly improve the performance of their portfolio. This effect is mainly driven by students with a higher than average risk aversion. Several behaviours may explain the increase in performance. We find evidence pointing to a reduction in the home and status quo biases for risk averse nudged participants. |
| Keywords: | Financial trading, Behavioural biases, Reminders, Nudges, Home bias, Status quo bias, Risk aversion |
| JEL: | D14 E21 E22 O16 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:clb:wpaper:201705&r=cbe |
| By: | David Gill; Zdenka Kissova; Jaesun Lee; Victoria Prowse |
| Abstract: | Rank-order relative-performance evaluation, in which pay, promotion, symbolic awards and educational achievement depend on the rank of individuals in the distribution of performance, is ubiquitous. Whenever organizations use rank-order relative-performance evaluation, people receive feedback about their rank. Using a real-e?ort experiment, we aim to discover whether people respond to the specific rank that they achieve. In particular, we leverage random variation in the allocation of rank among subjects who exerted the same effort to obtain a causal estimate of the rank response function that describes how effort provision responds to the content of rank-order feedback. We find that the rank response function is U-shaped. Subjects exhibit ‘first-place loving’ and ‘last-place loathing’, that is subjects work hardest after being ranked first or last. We discuss implications of our findings for the optimal design of performance feedback policies, workplace organizational structures and incentives schemes. |
| Keywords: | Relative performance evaluation; Relative performance feedback; Rank order feedback; Dynamic effort provision; Real effort experiment; Flat wage; Fixed wage; Taste for rank; Status seeking; Social esteem; Self esteem; Public feedback; Private feedback |
| JEL: | C23 C91 J22 M12 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1295&r=cbe |