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on Cognitive and Behavioural Economics |
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Issue of 2019‒05‒13
eight papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics); Stephane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales); Antoine Malézieux (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique, University of Exeter Business School - University of Exeter Business School); Jason Shogren (Departement Economy and Finance, University of Wyoming - UW - University of Wyoming) |
| Abstract: | Why do people pay taxes? Rational choice theory has fallen short in answering this question. Another explanation, called "tax morale", has been promoted. Tax morale captures the behavioral idea that non-monetary preferences (like norm-submission, moral emotions and moral judgments) might be better determinants of tax compliance than monetary trade-offs. Herein we report on two lab experiments designed to assess whether norm-submission, moral emotions (e.g., affective empathy, cognitive empathy, propensity to feel guilt and shame) or moral judgments (e.g., ethics principles, integrity, and moralization of everyday life) can help explain compliance behavior. Although we find statistically significant correlations of tax compliance behavior with empathy and shame, the economic significance of these correlations are low more than 80% of the variability in compliance remains unexplained. These results suggest that tax authorities should focus on the institutional context, rather than individual preference characteristics, to handle tax evasion. |
| Keywords: | tax evasion,tax morale,morality,personality traits,psychometrics |
| Date: | 2019–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02008071&r=all |
| By: | Arnaud Tognetti (Karolinska Institutet [Stockholm], Institute for Advanced Study Toulouse); David Doat (ANTHROPO-LAB - Laboratoire d'Anthropologie Expérimentale - ICL - Institut Catholique de Lille - UCL - Université catholique de Lille); Dimitri Dubois (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Rustam Romaniuc (ANTHROPO-LAB - Laboratoire d'Anthropologie Expérimentale - ICL - Institut Catholique de Lille - UCL - Université catholique de Lille, LEM - Lille économie management - LEM - UMR 9221 - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | The empathy-altruism hypothesis postulates that the awareness of others' need, pain, or distress increases empathetic feelings, which in turn triggers cooperative behaviour. Although some evidence supports this hypothesis, previous studies were prone to the ‘experimenter demand effects' raising concerns about the interpretation of the results. To avoid this issue, we designed a laboratory experiment where we examined whether the presence of individuals with a genuine physical disability would increase group cooperation in a public goods game. By manipulating the group composition during a social dilemma, we created a more ecologically valid environment closer to real-life interactions. Our results showed that the presence of physically disabled individuals did not affect group cooperation. Specifically, their presence did not affect the contributions of their physically abled partners. The lack of a surge in cooperative behaviour questions the interpretation of previous studies and suggests that they may be explained by an experimenter demand effect. Alternatively, our results may also suggest that in the context of a social dilemma with real stakes, people with physical disabilities are not perceived as being in need or do not induce enough empathy to overweight the cost of cooperation and trigger cooperative behaviours. |
| Keywords: | cooperation,empathy-altruism hypothesis,public goods game,physically disabled individuals |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02103832&r=all |
| By: | Alice Solda (Queensland University of Technology; University of Lyon); Changxia Ke (Queensland University of Technology); Lionel Page (Queensland University of Technology; University of Technology Sydney); William von Hippel (University of Queensland) |
| Abstract: | We aim to test the hypothesis that overconfidence arises as a strategy to influence others in social interactions. We design an experiment in which participants are incentivised either to form accurate beliefs about their performance at a test, or to convince a group of other participants that they performed well. We also vary participants’ ability to gather information about their performance. Our results provide, the different empirical links of von Hippel and Trivers’ (2011) theory of strategic overconfidence. |
| Keywords: | Overconfidence; motivated cognition; self-deception; persuasion; information sampling; experiment |
| JEL: | C91 D03 D83 |
| Date: | 2019–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:ecowps:2019/05&r=all |
| By: | Albert, Philipp; Kübler, Dorothea; Silva-Goncalves, Juliana |
| Abstract: | Ambition as the desire for personal achievement is an important driver of behavior. Using laboratory experiments, we study the role of social influence on ambition in two distinct domains of achievement, namely performance goals and task complexity. In the first case, participants set themselves a performance goal for a task they have to work on. The goal is associated with a proportional bonus that is added to a piece rate if the goal is reached. In the second case, they choose the complexity of the task, which is positively associated with the piece rate compensation and effort. In both cases we test whether observing peer choices influences own choices. We find strong evidence of peer effects on performance goals. In contrast, we find no support for peer effects on the choice of task complexity. |
| Keywords: | peer effects,ambition,goal setting,task difficulty,laboratory experiment |
| JEL: | C91 D83 D91 I24 M5 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2019202&r=all |
| By: | Ambroise Descamps (School of Economics and Finance, Queensland University of Technology; Oxera Consulting LLP); Sebastien Massoni (School of Economics and Finance, Queensland University of Technology); Lionel Page (University of Technology Sydney) |
| Abstract: | We investigate how people make choices when they are unsure about the value of the options they face and have to decide whether to choose now or wait and acquire more information first. We design a laboratory experiment to study whether human behaviour is able to approximate the optimal solution to this problem. We find that participants deviate from it in a systematic manner: they acquire too much information (when costly) or not enough (when cheap). These deviations costs participants between 10% and 25% of their potential payoffs. With time, participants tend to learn to approximate the optimal strategy. |
| Keywords: | search; decision under uncertainty; information; optimal stopping; real option |
| JEL: | C91 D81 D83 |
| Date: | 2019–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:ecowps:2019/04&r=all |
| By: | Abhinash Borah (Department of Economics, Ashoka University); Christopher Kops (Department of Economics, Ashoka University) |
| Abstract: | We introduce a theory of socially influenced individual choices. The source of social influence on an individual are his reference groups in society, formed of societal members he psychologically or contextually relates to. Choices made within an individual's reference groups have an influence on the choices he makes. Specifically, we propose a choice procedure under which, in any choice problem, he considers only those alternatives that he can identify with at least one of his reference groups. From this "consideration set," he chooses the best alternative according to his preferences. The procedure is an interactive one and captures the steady state of a process of mutual social influence. We behaviorally characterize this choice procedure. We also highlight the empirical content of the procedure by relating it to both experimental evidence and real world applications. |
| Keywords: | Individual choice, social influence, reference groups, consideration sets, interactive behavioral choices |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:ash:wpaper:1010&r=all |
| By: | Abhinash Bora (Department of Economics, Ashoka University); Christopher Kops (Department of Economics, Ashoka University) |
| Abstract: | We address the oft-repeated criticism that the demands which the rational choice approach makes on the knowledge and cognition of a decision maker (DM) are way beyond the capabilities of typical human intelligence. Our key finding is that it may be possible to arrive at this ideal of rationality by means of cognitively less demanding, heuristic-based ecological reasoning that draws on information about others' choices in the DM's environment. Formally, we propose a choice procedure under which, in any choice problem, the DM, first, uses this information to shortlist a set of alternatives. The DM does this shortlisting by a mental process of categorization whereby she draws similarities with certain societal members-the ingroup—and distinctions from others-the outgroup-and considers those alternatives that are similar (dissimilar) to ingroup (outgroup) members' choices. Then, she chooses from this shortlisted set by applying her preferences, which may be incomplete owing to limitations of knowledge. We show that if a certain homophily condition connecting the DM's preferences with her ingroup-outgroup categorization holds, then the procedure never leads the DM to making bad choices. If, in addition, a certain shortlisting consistency condition holds vis-a-vis non-comparable alternatives under the DM's preferences, then the procedure results in rational choices. |
| Keywords: | Rational choice, ecological rationality, ingroup-outgroup categorization, fast and frugal heuristics, homophily |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:ash:wpaper:1011&r=all |
| By: | Omar Al-Ubaydli; John List; Dana Suskind |
| Abstract: | Policymakers are increasingly turning to insights gained from the experimental method as a means of informing public policies. Whether-and to what extent-insights from a research study scale to the level of the broader public is, in many situations, based on blind faith. This scale-up problem can lead to a vast waste of resources, a missed opportunity to improve people's lives, and a diminution in the public's trust in the scientific method's ability to contribute to policymaking. This study provides a theoretical lens to deepen our understanding of the science of how to use science. Through a simple model, we highlight three elements of the scale-up problem: (1) when does evidence become actionable (appropriate statistical inference); (2) properties of the population; and (3) properties of the situation. We argue that until these three areas are fully understood and recognized by researchers and policymakers, the threats to scalability will render any scaling exercise as particularly vulnerable. In this way, our work represents a challenge to empiricists to estimate the nature and extent of how important the various threats to scalability are in practice, and to implement those in their original research. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:feb:artefa:00670&r=all |