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on Neuroeconomics |
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Issue of 2017‒10‒15
four papers chosen by |
| By: | Committee, Nobel Prize (Nobel Prize Committee) |
| Abstract: | Economists aim to develop models of human behavior and interactions in markets and other economic settings. But we humans behave in complex ways. Although we try to make rational decisions, we have limited cognitive abilities and limited willpower. While our decisions are often guided by self-interest, we also care about fairness and equity. Moreover cognitive abilities, self-control, and motivation can vary significantly across different individuals. |
| Keywords: | Behavioral economics; |
| JEL: | D03 D90 G02 |
| Date: | 2017–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nobelp:2017_001&r=neu |
| By: | Ji Yong Lee (Department of Agricultural Economics and Agribusiness,, University of Arkansas); Rodolfo M. Nayga, Jr (The National Bureau of Economic Research); Cary Deck (Department of Economics, Finance, and Legal Studies, University of Alabama); Andreas Drichoutis (Department of Agricultural Economics & Rural Development, Agricultural University of Athens) |
| Abstract: | Behavioral biases are more pronounced for individuals with lower cognitive abilities. This paper examines what connection if any there is between cognitive ability and bidding strategy in second price auctions. Despite truthful revelation being a weakly dominant strategy, previous experiments have consistently observed overbidding, which makes use of such auctions for inferring homegrown value problematic. Examining the effect of cognitive ability is important as it may help identify when one can reliably recover values from bids. The results indicate that more cognitively able subjects behave in closer accordance with theory, and that cognitive ability partially explains heterogeneity in bidding behavior. |
| Keywords: | Cognitive ability, Second price auction, Bid deviation, Overbidding, Laboratory experiment |
| JEL: | C91 C92 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:aua:wpaper:2017-3&r=neu |
| By: | Aline Bütikofer; Giovanni Peri |
| Abstract: | There is growing evidence that cognitive and noncognitive skills affect the economic and social outcomes of individuals. In this paper, we analyze how they affect the migration decisions of individuals during their lifetimes. We use data that combine military enlistment and administrative records for the male population born in 1932 and 1933 in Norway. Records of interviews with a psychologist at age 18 allow us to construct an index of `sociability' and `adaptability' for each individual, as well as an index of cognitive ability, the intelligence quotient. We find that adaptability and cognitive ability have significant and positive impacts on the probability of an individual migrating out of his area, whether this involves rural--urban, long distance, or international migration. Adaptability has a particularly strong impact on migration for individuals with low cognitive skills, implying a strong positive selection of less educated migrants with respect to the (previously unobserved) adaptability skill. We also show that cognitive skills have a strong positive effect on the pre- and post-migration wage differential, whereas adaptability has no significant effect. Moreover, individuals with high cognitive ability migrate to areas with large wage returns to cognitive abilities, whereas this is not true for individuals with high adaptability. This evidence suggests that adaptability reduces the psychological cost of migrating, whereas cognitive skills increase the monetary returns associated with migration. |
| JEL: | J24 J61 R23 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23877&r=neu |
| By: | Konrad, Kai; Lohse, Tim; Simon, Sven |
| Abstract: | We conduct a laboratory experiment of self-serving deceptive behavior and exogenously vary the level of reflection time. We find that time pressure leads to more honesty compared to sufficient contemplation time. Moreover, more reflection time increases awareness of the misreporting opportunity. However, it has no effect on the conscious decision of whether to misreport or not. Due to subjects' lack of awareness under time pressure we conclude that misreporting is not the intuitive response. |
| JEL: | C91 D83 K42 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168171&r=neu |