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on Cognitive and Behavioural Economics |
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Issue of 2025–03–10
two papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Paul Grass; Philipp Schirmer; Malin Siemers |
| Keywords: | mental models, learning dynamics, attention, mental representation, bounded rationality People often form mental models based on incomplete information, revising them as new relevant data becomes available. In this paper, we experimentally investigate how individuals update their models when data on predictive variables are gradually revealed. We find that people’s models tend to be ‘sticky, ’ as their final models remain strongly influenced by earlier models formed using a subset of variables. Guided by a simple framework highlighting the role of attention in shaping model revisions, we document that only participants who exert lower cognitive effort during the revising stage, relative to the initial model formation stage – as proxied by time spent – exhibit significant model stickiness. Additionally, subjects’ final models are strongly predicted by their reasoning type – their self-described approach to extracting models from multidimensional data. While model stickiness varies across reasoning types, effort allocation across stages remains a strong predictor of stickiness even when accounting for reasoning. |
| JEL: | D83 D91 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_655 |
| By: | Fidanoski, Filip; Dixit, Vinayak; Ortmann, Andreas |
| Abstract: | Luckman et al. (2018) experimentally tested the conjecture that a single model of risky intertemporal choice can account for both risky and intertemporal choices, and under the conditions of their experiment, found evidence supporting it. Given the existing literature, that is a remarkable result which warrants (conceptual) replication. Following a tradition in psychology, Luckman et al. (2018) had first-year psychology students participate that were rewarded with non-monetary course credits (see also Luckman et al., 2020). Proper incentivisation is a long-standing bone of contention among experimentally working economists and psychologists, last but not least when it comes to the elicitation of preferences of any kind. Another reason to be sceptical is that the experiment was not properly powered up; the no-difference results reported by the authors might be spurious. In our conceptual replication of Luckman et al. (2018), we find significant differences between the risky and intertemporal choices at both the group and individual level. We find further that there is no significant difference between choices made by participants that are paid a flat incentive and participants that are paid under the random incentive scheme, at the group level. We find that order effects matter for intertemporal choices, but not for risky choices. At the individual level, we find evidence in favour of the model that assumes a common value function, but separate choice functions. This result is robust across our incentive systems, and order of presentation, but sensitive to different prior distributions. |
| Keywords: | experimental practices, replication, risky intertemporal preferences, risk preferences, time preferences |
| JEL: | C11 C52 C91 D01 D81 D90 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:i4rdps:205 |