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on Cognitive and Behavioural Economics |
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Issue of 2023‒01‒09
twelve papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale |
| By: | Dohmen, Thomas (University of Bonn and IZA); Quercia, Simone (University of Verona); Willrodt, Jana (Düsseldorf Institute for Competition Economics (DICE)) |
| Abstract: | In this paper, we provide an explanation for why risk taking is related to optimism. Using a laboratory experiment, we show that the degree of optimism predicts whether people tend to focus on the positive or negative outcomes of risky decisions. While optimists tend to focus on the good outcomes, pessimists focus on the bad outcomes of risk. The tendency to focus on good or bad outcomes of risk in turn affects both the self-reported willingness to take risk and actual risktaking behavior. This suggests that dispositional optimism may affect risk taking mainly by shifting attention to specific outcomes rather than causing misperception of probabilities. In line with this, in a second study we find evidence that dispositional optimism is related to elicited parameters of rank dependent utility theory suggesting that focusing may be among the psychological determinants of decision weights. Finally, we corroborate our findings with process data related to focusing showing that optimists tend to remember more and attend more to good outcomes and this in turn affects their risk taking. |
| Keywords: | risk taking behavior, optimism, preference measure |
| JEL: | D91 C91 D81 D01 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15763&r=cbe |
| By: | Abel, Martin (Bowdoin College); Burger, Rulof (Stellenbosch University) |
| Abstract: | We study the effect of monetary incentives on effort in a prosocial task: writing letters encouraging voter turnout. Volunteers are randomized to receive no incentive, unconditional upfront payment, payment conditional on completing the task, or to have a choice between the two payment schemes. The unconditional and conditional payment both increase task completion rates by about 18 percentage points (43%). Giving people a choice between the payment scheme doubles the effect on task completion (35 p.p., 84%). Unlike unconditional payments, a choice over contracts also increases time spent on the task and letter quality. Survey responses suggest that giving people a choice is effective because it increases task ownership rather than the desire to return a favor or avoid feelings of guilt. |
| Keywords: | self determination, gift exchange, guilt aversion, labor supply |
| JEL: | D86 D91 J22 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15769&r=cbe |
| By: | Linas Nasvytis |
| Abstract: | Large amounts of evidence suggest that trust levels in a country are an important determinant of its macroeconomic growth. In this paper, we investigate one channel through which trust might support economic performance: through the levels of patience, also known as time preference in the economics literature. Following Gabaix and Laibson (2017), we first argue that time preference can be modelled as optimal Bayesian inference based on noisy signals about the future, so that it is affected by the perceived certainty of future outcomes. Drawing on neuroscience literature, we argue that the mechanism linking trust and patience could be facilitated by the neurotransmitter oxytocin. On the one hand, it is a neural correlate of trusting behavior. On the other, it has an impact on the brain's encoding of prediction error, and could therefore increase the perceived certainty of a neural representation of a future event. The relationship between trust and time preference is tested experimentally using the Trust Game. While the paper does not find a significant effect of trust on time preference or the levels of certainty, it proposes an experimental design that can successfully manipulate people's short-term levels of trust for experimental purposes. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.17080&r=cbe |
| By: | Tim Kaiser; Lukas Menkhoff; Luis Oberrauch; Manuel Menkhoff |
| Abstract: | We study the malleability of patience via educational interventions by aggregating evidence from earlier experiments in a meta-analysis and by conducting a field experiment. We find that the average effect of interventions on patience is positive but uncertain. The age of students explains a large share of between-study heterogeneity in treatment effects. Thus, we conduct a field experiment covering both youths and adults in Uganda. We find heterogenous effects by age: adults’ patience measured in incentivized tasks is unaffected by the intervention after 15 months follow-up, but we observe large effects on patience and estimated discount factors for youth. |
| Keywords: | patience, time preferences, malleability, field experiment, educational intervention |
| JEL: | C93 D15 I21 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10080&r=cbe |
| By: | Aruguete, Natalia; Calvo, Ernesto; Scartascini, Carlos; Ventura, Tiago |
| Abstract: | Recent increases in political polarization in social media raise questions about the relationship between negative online messages and the decline in political trust around the world. To evaluate this claim causally, we implement a variant of the well-known trust game in a survey experiment with 4,800 respondents in Brazil and Mexico. Our design allows to test the effect of social media on trust and trustworthiness. Survey respondents alternate as agents (politicians) and principals (voters). Players can cast votes, trust others with their votes, and cast entrusted votes. The players rewards are contingent on their preferred “candidate” winning the election. We measure the extent to which voters place their trust in others and are themselves trustworthy, that is, willing to honor requests that may not benefit them. Treated respondents are exposed to messages from in-group or out-group politicians, and with positive or negative tone. Results provide robust support for a negative effect of uncivil partisan discourse on trust behavior and null results on trustworthiness. The negative effect on trust is considerably greater among randomly treated respondents who engage with social media messages. These results show that engaging with messages on social media can have a deleterious effect on trust, even when those messages are not relevant to the task at hand or not representative of the actions of the individuals involved in the game. |
| Keywords: | Trust;Social media;Trustworthiness;Political polarization |
| JEL: | D72 D83 D91 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:11385&r=cbe |
| By: | Rodríguez Chatruc, Marisol; Rozo, Sandra |
| Abstract: | Can taking the perspective of an out-group reduce prejudice and promote prosociality? Building on insights from social psychology, we study the case of Colombian natives and Venezuelan immigrants. We conducted an online experiment in which we randomly assigned natives to either play an online game that immersed them in the life of a Venezuelan migrant or to watch a documentary about Venezuelans crossing the border on foot. Relative to a control group, both treatments increased altruism towards Venezuelans and improved some attitudes, but only the game significantly increased self-reported trust. |
| Keywords: | prejudice;perspective taking |
| JEL: | C91 D91 J15 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:11599&r=cbe |
| By: | Segovia, Michelle; Palma, Marco; Lusk, Jayson L.; Drichoutis, Andreas |
| Abstract: | We explore the effect of different presentation formats on elicitation of risk preferences using a popular probability-varying task (Holt and Laury, 2002} and a payoff-varying task (Drichoutis and Lusk, 2016). The presentation formats use horizontal bars that vary either the width or height of the bars (or both at the same time) to potentially help subjects in judging how large or small probabilities and monetary amounts are in a given choice task. These graphical formats are compared to a text only format. We complement our data collection with eye-tracking data that enriches our structural models with additional information regarding how visual attention and engagement vary with the presented information. While we find no statistically significant effects of presentation formats on elicited parameters for risk preferences, we find that eye-tracking information not only is associated with preference parameters, but it also changes the inferences with respect to which decision theory better fits our data. |
| Keywords: | Risk; Individual decision making; Visual attention; Eye tracking |
| JEL: | C91 D81 D83 |
| Date: | 2022–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115572&r=cbe |
| By: | Reona Hayashi; So Morikawa; Takeshi Ojima; Manami Tsuruta |
| Abstract: | While risk preference is one of the cornerstones of bureaucratic behavior theories, there is no consensus on its meaning and conceptualization. Only a few studies have incorporated different concepts into the investigation of the differences between the public and private sectors in risk preference and the association between public service motivation (PSM) and risk preference. Using self-reported and behavioral measures for risk preference, we analyzed the risk aversion of public employees and those with high PSM. The behavioral measures were a multiple price list and lottery choice tasks for higher-order risk preferences (prudence and temperance). A general self-reported measure revealed that public employees were risk-averse, whereas behavioral measures showed that public employees were not risk-averse with the multiple price list but more temperate. Those with high PSM were risk-averse using prudence and temperance measures, while they tended to be risk-taking in self-reports. The opposite results in PSM are partially due to the different sub-dimensions of PSM, yielding risk aversion for those with high commitment to public values and risk-taking for those with high self-sacrifice. |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:toh:tupdaa:28&r=cbe |
| By: | Scartascini, Carlos; Zamora, Paula |
| Abstract: | Introducing financial incentives to increase productivity in the public sector tends to be politically and bureaucratically cumbersome, particularly in developing countries. Behavioral interventions could be a low-cost alternative, both politically and financially, although evidence of their effectiveness remains scarce. We evaluate the effect of redesigning the notice requiring civil servants in Buenos Aires to comply with citizens requests under Argentina's freedom of information act. The new notice, sent to the treatment group, attempts to exploit salience, deterrence, clarity, and social norms to increase adherence to deadlines. The results show an increase in the share of requests fulfilled by the second deadline, possibly because of a strong anchoring effect. These findings indicate that behavioral interventions can affect civil servants' actions. The fact that the intervention occurred at the same time as a civil service training program with sessions attended by members of both the control and treatment groups allows us to evaluate spillover effects. The evidence suggests that the time it takes a members of the treatment group to respond to a request increases with her interactions with members of the control group at the workshops. These findings have implications for policy design. First, they indicate that behavioral interventions could affect task compliance and productivity in the public sector. Second, they provide evidence that workshops may not always have the intended consequences, particularly when they increase interactions among employees with high and low incentives for task compliance. |
| Keywords: | Freedom of Information Act;Civil Servants;Performance of Government |
| JEL: | C93 D91 H11 H83 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:11756&r=cbe |
| By: | Chatterjee, Sidharta |
| Abstract: | This brief research note stresses the role intellectual and cognitive elements play in critical thinking and decision-making. Critical thinking skills are highly desirable among young adults and students, employees, teachers, and creative artists. The various elements of the functional brain that contribute to critical thinking are those that define our complex cognitive system. Critical thinking, like any other intellectual process, necessitates the use of focused attention, information processing, and reasoning abilities. It is an essential skill that has important applications in decision-making and in various domains of creative endeavors. A competent critical thinker is able to take a more rational approach to decision making. This paper highlights these issues and urges individuals to make space for critical thinking, which is so much in demand in these fast-paced digital environments. |
| Keywords: | Critical thinking, decision-making, rational choices, Intellectual process |
| JEL: | D7 O34 |
| Date: | 2022–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115666&r=cbe |
| By: | Charles Efferson; Helen Bernhard; Urs Fischbacher; Ernst Fehr |
| Abstract: | Repeated interactions provide a prominent but paradoxical hypothesis for human cooperation in one-shot interactions. Intergroup competitions provide a different hypothesis that is intuitively appealing but heterodox. We show that neither mechanism reliably supports the evolution of cooperation when actions vary continuously. Ambiguous reciprocity, a strategy generally ruled out in models of reciprocal altruism, completely undermines cooperation under repeated interactions, which challenges repeated interactions as a stand-alone explanation for cooperation in both repeated and one-shot settings. Intergroup competitions do not reliably support cooperation because groups tend to be similar under relevant conditions. Moreover, even if groups vary, cooperative groups may lose competitions for several reasons. Although repeated interactions and group competitions do not support cooperation by themselves, combining them often triggers powerful synergies because group competitions can stabilise cooperative strategies against the corrosive effect of ambiguous reciprocity. Evolved strategies often consist of cooperative reciprocity with ingroup partners and uncooperative reciprocity with outgroup partners. Results from a one-shot behavioural experiment in Papua New Guinea fit exactly this pattern. They thus indicate neither an evolutionary history of repeated interactions without group competition nor a history of group competition without repeated interactions. Our results are only consistent with social motives that evolved under the joint influence of both mechanisms together. |
| Keywords: | evolution of cooperation, reciprocity, intergroup competition, social dilemma |
| JEL: | C60 C70 C90 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10133&r=cbe |
| By: | Itzhak Rasooly (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Roberto Rozzi (Unipd - Università degli Studi di Padova = University of Padua, Université de Venise Ca’ Foscari | Università Ca’ Foscari di Venezia) |
| Abstract: | In contrast to classical social norm experiments, we conduct experiments that semicontinuously randomise the share of individuals who are taking a particular action in a given environment. Using our experimental results, we are able to estimate the distributions of individual tipping points across our settings. We find that tipping points are very heterogenous, and that a substantial share choose to do the action (or not) regardless of what others are doing. We also show that, once embedded in dynamic models, our estimates predict that individuals will end up doing very different things despite engaging in copying-like behaviour. |
| Keywords: | Social norms, Field experiment, Dynamic models |
| Date: | 2022–12–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpspec:hal-03892947&r=cbe |