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on Cognitive and Behavioural Economics |
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Issue of 2021‒08‒09
six papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Peter Andre; Teodora Boneva; Felix Chopra; Armin Falk |
| Abstract: | We document individual willingness to fight climate change and its behavioral determinants in a large representative sample of US adults. Willingness to fight climate change – as measured through an incentivized donation decision – is highly heterogeneous across the population. Individual beliefs about social norms, economic preferences such as patience and altruism, as well as universal moral values positively predict climate preferences. Moreover, we document systematic misperceptions of prevalent social norms. Respondents vastly underestimate the prevalence of climatefriendly behaviors and norms among their fellow citizens. Providing respondents with correct information causally raises individual willingness to fight climate change as well as individual support for climate policies. The effects are strongest for individuals who are skeptical about the existence and threat of global warming. |
| Keywords: | Climate change, climate behavior, climate policies, social norms, economic preferences, moral values, beliefs, survey experiments |
| JEL: | D64 D83 D91 Q51 Z13 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2021_310&r= |
| By: | Lorenzo Esposito (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – Banca d'Italia, Milano); Lorenzo Marrese (DISCE, Università Cattolica del Sacro Cuore) |
| Abstract: | Results of behavioral economics pose a strong challenge to mainstream finance theory conclusions. We discuss, theoretically and empirically, the connections of cognitive skills, biases and financial decisions using the Cognitive Reflection Test (Frederick, 2005). In particular, we have chosen overconfidence, risk aversion, bandwagon effect, time preference and money illusion, among the biases most discussed in the literature. The experiment we conducted confirmed a role of the cognitive skills in determining the decision mechanism of the investor although not neatly, especially for more complex biases, such as money illusion. Finally, we expose policy alternatives, focusing on the role of financial education to tackle cognitive biases in finance and monetary policy. |
| Keywords: | cognitive biases, financial education, behavioral economics, CRT |
| JEL: | G41 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie5:dipe0019&r= |
| By: | Ennio Bilancini; Leonardo Boncinelli; Pietro Guarnieri; Lorenzo Spadoni |
| Abstract: | We investigate experimentally how decisions in the Dictator Game are affected by cognitive manipulations aimed at promoting greater reliance on deliberation. Specifically, we run an online experiment where we have 6 distinct experimental conditions resulting from the combination of 2 conditions for the Dictator Game (non-bully: the dictator is initially endowed with all the money; bully: the initial endowment is equally split), and 3 conditions for the cognitive manipulations (time delay: decisions are delayed; motivated delay: decisions are delayed and a written motivation is required; control: no manipulation). We find that the equal initial endowment leads the dictator to keep less for himself, confirming in the online setting previous evidence from the lab. Further, our findings suggest that the request to write a motivation makes subjects take less for themselves with respect to the mere request to wait some time before choosing. |
| Keywords: | dual process, motivation, deliberation, intuition, Dictator Game, bully, social norms |
| JEL: | D01 D81 |
| Date: | 2021–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2021/277&r= |
| By: | Keser, Claudia; Späth, Maximilian |
| Abstract: | We study the impact of information on the effectiveness of a taking frame in the context of charitable giving. In our laboratory experiment, either the decision maker (giving frame) or the recipient (taking frame) receives an endowment. In both cases, the decision maker can freely decide the final allocation of the money. In addition to the frame, we vary the level of information that we provide about the worthiness of the receiving charity. In keeping with our theoretical prediction, participants donate significantly more, when the decision is framed as taking rather than as giving. However, this framing effect is smaller, the more information we provide on the charity. |
| Keywords: | Information,Giving,Taking,Charity,Experiment |
| JEL: | C91 D64 D80 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:424&r= |
| By: | Marco Catola; Simone D'Alessandro; Pietro Guarnieri; Veronica Pizziol |
| Abstract: | This paper shows that personal norms have a prominent role in explaining prosocial contributions in an online public good game. This finding suggests that the role of social norms might be loosened when subjects are distanced, and interaction occurs online and in complete anonymity. Through cluster analysis, we show that a) subjects who contributed more hold both high expectations about the social norms followed by others and a high personal normative commitment; b) subjects who contributed less hold both low expectations and have low personal commitment. However, for both clusters the personal norm is the main driver of decisions. Moreover, we elicited personal and social norms in a group of subjects not performing the contribution task, thus obtaining a measure of norms not affected by self-justification and ruling out a potential endogeneity issue. |
| Keywords: | Public good game, online experiment, personal norms, social norms, belief elicitation, social dilemma |
| JEL: | C90 D71 H41 |
| Date: | 2021–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2021/276&r= |
| By: | Cobb-Clark, Deborah A.; Dahmann, Sarah Christina; Kamhöfer, Daniel A.; Schildberg-Hörisch, Hannah |
| Abstract: | We propose a broadly applicable empirical approach to classify individuals as timeconsistent versus naïve or sophisticated regarding their self-control limitations. Operationalizing our approach based on nationally representative data reveals that self-control problems are pervasive and that most people are at least partly aware of their limited self-control. Compared to naïfs, sophisticates have higher IQs, better educated parents, and are more likely to take up commitment devices. Accounting for both the level and awareness of self-control limitations has predictive power beyond one-dimensional notions of self-control that neglect awareness. Importantly, sophistication fully compensates for self-control problems when choices involve immediate costs and later benefits. Raising people's awareness of their own self-control limitations may thus assist them in overcoming any adverse consequences. |
| Keywords: | self-control,sophistication,naïveté,commitment devices,present bias |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:365&r= |