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on Cognitive and Behavioural Economics |
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Issue of 2020‒05‒25
fifteen papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Nicolas Jacquemet (PSE - Paris School of Economics); Stéphane Luchini (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Antoine Malezieux; Jason Shogren (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: | 2019–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:hal-02290402&r=all |
| By: | Eugenio Proto; Aldo Rustichini; Andis Sofianos |
| Abstract: | A large literature in behavioral economics has emphasized in the last decades the role of individual differences in social preferences (such as trust and altruism) in influencing behavior in strategic environments. Here we emphasize the role of attention and working memory, and show that social interactions among heterogeneous groups are mediated by differences in cognitive skills. Our design uses a repeated prisoner’s dilemma; we compare rates of cooperation in groups of subjects separated according to their IQ, with those in integrated groups, where subjects of different IQ are pooled together. In integrated groups we observe higher aggregated cooperation rates and profits than in separated groups. There are gains in earnings among lower IQ subjects who learn how to cooperate faster than when they play separately, and smaller losses for higher IQ subjects. We also see that higher IQ subjects become less lenient when they are matched with lower IQ subjects than when they play separately. This pattern is an instance of a general phenomenon, which we demonstrate in an evolutionary game theory model, in which higher IQ among subjects induces –possibly thanks to better working memory– a lower frequency of errors in strategy implementation. We show that players indeed choose less-lenient strategies in environments in which subjects have higher error rates. Estimations of errors and strategies from the experimental data are consistent with the hypothesis and model’s predictions. |
| Keywords: | Repeated Prisoners Dilemma, Cooperation, Intelligence, IQ, Strategy, Error in Transition |
| JEL: | C73 C91 C92 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2020_07&r=all |
| By: | Perline Demange; Margherita Malanchini; Travis Mallard; Pietro Biroli (University of Zurich); Simon Cox; Andrew Grotzinger; Elliot Tucker-Drob; Abdel Abdellaoui; Louise Arseneault; Elsje van Bergen; Dorret Boomsma; Avshalom Caspi (Duke University); David Corcoran; Benjamin Domingue; Kathleen Harris; Hill Ip; Colter Mitchell; Terrie E. Moffitt (Duke University / King's College London); Richie Poulton; Joseph Prinz; Karen Sugden; Jasmin Wertz; Ben Williams (George Washington University); Eveline de Zeeuw; Daniel Belsky (Columbia University); K. Paige Harden (University of Texas, Austin); Michel Nivard |
| Abstract: | Educational attainment (EA) is influenced by characteristics other than cognitive ability, but little is known about the genetic architecture of these “non-cognitive” contributions to EA. Here, we use Genomic Structural Equation Modelling and prior genome-wide association studies (GWASs) of EA (N = 1,131,881) and cognitive test performance (N = 257,841) to estimate SNP associations with EA variation that is independent of cognitive ability. We identified 157 genome-wide significant loci and a polygenic architecture accounting for 57% of genetic variance in EA. Non-cognitive genetics were as strongly related to socioeconomic success and longevity as genetic variants associated with cognitive performance. Noncognitive genetics were further related to openness to experience and other personality traits, less risky behavior, and increased risk for psychiatric disorders. Non-cognitive genetics were enriched in the same brain tissues and cell types as cognitive performance, but showed different associations with gray-matter brain volumes. By conducting a GWAS of a phenotype that was not directly measured, we offer a first view of genetic architecture of non-cognitive skills influencing educational success. |
| Keywords: | genome-wide significant loci, socioeconomic success, longevity |
| JEL: | I24 I10 I14 J24 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2020-028&r=all |
| By: | Roberto Galbiati (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); 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) |
| Abstract: | In situations where social payoffs are not aligned with private incentives, enforcement with fines can be a way to sustain cooperation. In this paper we show, by the means of a lab experiment , that past fines can have an effect on current behavior even when no longer in force. We document two mechanisms: a) past fines affect directly individuals' future propensity to cooperate; b) when fines for non cooperation are in place in the past, individuals experience higher levels of cooperation from partners and, consistent with indirect reciprocity motives, are in turn nicer towards others once these fines have been removed. This second mechanism is empirically prevalent and, in contrast with the first, induces a snowball effect of past enforcement. Our results can inform the design of costly enforcement policies. |
| Keywords: | experiments,Laws,social values,cooperation,learning,spillovers,persistence of institutions,repeated games |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:halshs-01971468&r=all |
| By: | Eugen Dimant |
| Abstract: | This paper uses a novel experimental design to study the contagion of pro- and anti-social behavior and the role of social proximity among peers. Across systematic variations thereof, we find that anti-social behavior is generally more contagious than pro-social behavior. Surprisingly, we also find that social proximity amplifies the contagion of anti-social behavior more strongly than the contagion of pro-social behavior. Anti-social individuals are also most susceptible to the behavioral contagion of other anti-social peers. These findings paired with the methodological contribution inform the design of effective norm-based policy interventions directed at facilitating pro-social behavior and reducing anti-social behavior in social and economic environments. |
| Keywords: | behavioral contagion, peer effects, anti-social & pro-social behavior |
| JEL: | C91 D64 D90 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8263&r=all |
| By: | Marine Hainguerlot (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Jean-Christophe Vergnaud (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Vincent de Gardelle (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics) |
| Abstract: | Learning how certain cues in our environment predict specific states of nature is an essential ability for survival. However learning typically requires external feedback, which is not always available in everyday life. One potential substitute for external feedback could be to use the confidence we have in our decisions. Under this hypothesis, if no external feedback is available, then the agents' ability to learn about predictive cues should increase with the quality of their confidence judgments (i.e. metacognitive efficiency). We tested and confirmed this novel prediction in an experimental study using a perceptual decision task. We evaluated in separate sessions the metacognitive abilities of participants (N = 65) and their abilities to learn about predictive cues. As predicted, participants with greater metacognitive abilities learned more about the cues. Knowledge of the cues improved accuracy in the perceptual task. Our results provide strong evidence that confidence plays an active role in improving learning and performance. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:hal-01761531&r=all |
| By: | Adena, Maja; Huck, Steffen |
| Abstract: | In an artefactual field experiment we implement a crowdfunding campaign for a club good-an institute's summer party with free food, drinks, and music-and compare "donation" and "contribution" framings. We find that the "donation" frame generates higher income than the "contribution" frame. While individuals in the "donation" frame give substantially larger amounts, the individuals in the "contribution" frame respond more strongly to reward thresholds and suggestions. An additional survey experiment on M-Turk indicates that the term "donation" triggers more positive emotional responses, and that emotions are highly correlated with giving. It appears that making a "donation" is perceived as a more voluntary act and is, thus, more successful at generating warm glow than making a "contribution". We conjecture that this extends to other funding mechanisms. |
| Keywords: | crowdfunding,field experiment,framing,suggestions |
| JEL: | C93 D64 D12 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2016308r&r=all |
| By: | Pelligra, Vittorio; Reggiani, Tommaso (Cardiff Business School); Zizzo, Daniel John (University of Queensland) |
| Abstract: | We consider the notions of static and dynamic reasonableness of requests by an authority in a trust game experiment. The authority, modelled as the experimenter, systematically varies the experimental norm of what is expected from trustees to return to trustors, both in terms of the level of each request and in terms of the 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 compared to the same requests presented in random or decreasing order. Requests never systematically increase trustworthiness but may decrease it. |
| Keywords: | trust; trustworthiness; authority; reasonableness; moral wiggle room; moral licensing |
| JEL: | C91 D01 D03 D63 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2020/7&r=all |
| By: | David L. Dickinson |
| Abstract: | This paper present new evidence on the confirmation bias in two polarizing topic areas: politics and religion. While a reasonable amount of evidence has documented this bias in the domain of politics, relatively little existing research has examined the confirmation bias in religion. I developed a novel task in the religious domain to examine the presence of the confirmation bias and its comparative strength compared to that observed in the political domain. Using a preregistered data collection and analysis plan, I examine data from n=402 participants who were prescreened to be distinct in terms of political and religious beliefs. Each was administered a two-pronged confirmation bias online that examined selective information exposure and perceived strength of arguments incongruent to one’s own beliefs regarding “gun control” and the “existence of God”. Results showed strong support for the existence of a confirmation bias along both dimensions and in terms of both information exposure and perceived argument strength. I also examined the hypothesis that the confirmation bias is actually stronger in situations where more thought or deliberation is brought to bear on the task. The evidence here depends on the measure of deliberation used, but generally is in the direction hypothesized. More strongly, we find that individuals who have thought a lot about the topic at hand (gun control and the existence of God displayed more of a confirmation bias in perceived argument strength than those having thought less about the issue. A main contribution of this paper is to offer new evidence documenting the confirmation bias in a more direct task comparison across domains. And, the findings regarding how deliberation may worsen the bias are in line with previous research suggesting the confirmation bias may be unlike other decision biases—this bias may thrive when the decision maker is more is more deliberative or thoughtful. Key Words: Confirmation bias, decision bias, politics, religion, behavioral economics |
| JEL: | D91 C9 Z1 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:20-06&r=all |
| By: | Patrick Arni; Davide Dragone; Lorenz Goette; Nicolas R. Ziebarth |
| Abstract: | This paper investigates the role of biased health perceptions as driving forces of risky health behavior. We define absolute and relative health perception biases, illustrate their measurement in surveys and provide evidence on their relevance. Next, we decompose the theoretical effect into its extensive and intensive margin: when the extensive margin dominates, people (wrongly) believe they are healthy enough to “afford” unhealthy behavior. Finally, using three population surveys, we provide robust empirical evidence that respondents who overestimate their health are less likely to exercise and sleep enough, but more likely to eat unhealthily and drink alcohol daily. |
| JEL: | C93 D03 D83 I12 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1146&r=all |
| By: | Diemo Urbig (Schumpeter School of Business and Economics, University of Wuppertal); Werner Boente (Schumpeter School of Business and Economics, University of Wuppertal); Vivien D. Procher (Grenoble Ecole de Management, Univ Grenoble Alpes ComUE and RWI - Leibniz-Institut für Wirtschaftsforschung); Sandro Lombardo (Schumpeter School of Business and Economics, University of Wuppertal) |
| Abstract: | Referring to Isreal M. Kirzner (1973) and Joseph A. Schumpeter (1934), who emphasized the competitive nature of entrepreneurship, this study investigates whether potential and revealed entrepreneurs are more likely to seek competition than non-entrepreneurs. We provide a conceptual framework that links entrepreneurship to three facets of individual competitiveness drawn from economic, entrepreneurship, and psychological research: a desire to win, striving for personal development, and an enjoyment of competition. Following economic research linking competitive behavior in experiments to career choices, we conduct a lab-in-the-field study and demonstrate that entrepreneurs are more likely to enter competitions than non-entrepreneurs. Accounting for individual desires to win and mastery-related achievement motivations, our results indicate that entrepreneurs tend to enter competition for the sake of competition itself rather than for the prospect of winning it or personal development. Our results suggest that enjoyment of competition might be an additional factor driving entrepreneurs’ market entry decisions beyond well-known factors like overconfidence and risk taking. |
| Keywords: | Enjoyment of competition; Individual competitiveness; Entrepreneurship; Behavioral Economics; Lab-in-the-field experiment |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp20001&r=all |
| By: | Thomas Simon (Johns Hopkins University/Nanjing University) |
| Abstract: | The American Psychological Association submitted a brief in the Supreme Court in Hodgson v. Minnesota (1990), arguing that given that adolescents had similar cognitive skills as adults, they should not be required to notify their parents before having an abortion. Yet, it submitted a brief in Roper v Simmons (2005) arguing that since science had demonstrated that adolescent brains were not as developed as adult brains, they lacked the ability to take moral responsibility for their decisions. Many commentators found these positions inconsistent while others tried to reconcile them. We need to (1) recognize the complex interplay between the cognitive and the emotive, which has legal and educational implications; (2) more effectively integrate the cognitive capacities and so-called emotive short-comings of adolescents; (3) more seriously consider the implications of neuroscientific claims about the adolescent brain; and (4) recognize, encourage, and facilitate the cognitive capacities of people to make moral judgments at a very early age. |
| Keywords: | abortion, adolescents, brain development, cognitive ability, moral responsibility |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:10012610&r=all |
| By: | Pol Campos-Mercade; Armando N. Meier; Florian H. Schneider; Erik Wengström |
| Abstract: | Socially responsible behavior is crucial for slowing the spread of infectious diseases. However, economic and epidemiological models of disease transmission abstract from prosocial motivations as a driver of behaviors that impact the health of others. In an incentivized study, we show that a large majority of people are very reluctant to put others at risk for their personal benefit. Moreover, this experimental measure of prosociality predicts health behaviors during the COVID-19 pandemic, measured in a separate and ostensibly unrelated study with the same people. Prosocial individuals are more likely to follow physical distancing guidelines, stay home when sick, and buy face masks. We also find that prosociality measured two years before the pandemic predicts health behaviors during the pandemic. Our findings indicate that prosociality is a stable, long-term predictor of policy-relevant behaviors, suggesting that the impact of policies on a population may depend on the degree of prosociality. |
| Keywords: | Social preferences, health behavior, externalities, COVID-19 |
| JEL: | D01 D91 I12 I18 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:346&r=all |
| By: | Ho Fai Chan; Nikita Ferguson; David A. Savage; David Stadelmann; Benno Torgler |
| Abstract: | Although science has been an incredibly pow erful and revolutionary force, it is not clear whether science is suited to perf ormance under pressure; generally, science achieves best in its usual comfort zone of patience, caution, and slowness. But if science is organized knowledge and acts as a guiding force for making informed decisions, it is important to understand how science and scientists perform as a reliable and valuable institution in a global crisis such as COVID-19. This paper provides insights and reflections looking at aspects such as speed, transparency, trust, data sharing, scientists in the political arena, and the psychology of scientists; all of which are areas inviting more detailed investigation by future studies conducting systematic empirical studies. |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2020-07&r=all |
| By: | Giuseppe Attanasi; Michela Chessa; Sara Gil Gallen; Patrick Llerena |
| Abstract: | The interplay between individual creative ability and the way to enhance it – through monetary and nonmonetary incentives – is an issue with tremendous potential for economic analysis. In this survey, we dwell into the issue by focusing on the methodological advantages of economic experiments. We provide a review of the literature in experimental economics on creativity, identifying six main directions of analysis. Namely, the impact on creativity of: (1) low vs high monetary incentives, (2) the interplay of monetary incentives and tasks, (3) within-group competition, (4) within-group cooperation, (5) cultural factors, and (6) non-monetary social incentives. In the spirit of a “meta-study,” we classify the works in our review not only according to the aforementioned research questions, but also disentangling by the type of creative task that the experimental subjects face, the way in which creativity is assessed, and other key features of standard experimental procedures in economics. This multidimensional comparison allows us to conclude that the current lack of robust findings on the determinants of creativity in economics might be due to the absence of comparable experimental studies under the same experimental conditions. We conduct our analysis without neglecting the psychological roots of creativity research and their way through management, underlying how both disciplines have heavily outlined the work of experimental economists in the topic of creativity. |
| Keywords: | Creativity, Experimental Economics, Social Psychology, Incentives, Intrinsic Motivation. |
| JEL: | C91 C92 D91 O31 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2020-23&r=all |