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on Neuroeconomics |
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Issue of 2020‒01‒20
five papers chosen by |
| By: | Henning Hermes (NHH Norwegian School of Economics); Daniel Schunk (Johannes Gutenberg University Mainz) |
| Abstract: | We develop a new design for the experimental beauty-contest game (BCG) that is suitable for children in school age and test it with 114 schoolchildren aged 9–11 years. In addition, we collect measures on cognitive skills and perspective-taking abilities to identify determinants of successful performance in the game. Results demonstrate that children can successfully understand and play a BCG. Choices start at a slightly higher level than those of adults but learning over time and depth of reasoning are largely comparable with the results of studies run with adults. Cognitive skills are predictive only of whether children choose weakly dominated strategies, whereas measures of perspective-taking abilities are strongly linked to successful performance in the BCG. These ?ndings emphasize the importance of perspective-taking abilities for strategic interaction and economic decision-making. Our new design for the experimental BCG allows further study of the development of strategic interaction skills starting already in school age. |
| Keywords: | children, experimental beauty-contest game, guessing game, strategic interaction, decision-making, perspective-taking, theory of mind, empathy, noncognitive skills |
| JEL: | C72 C92 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:1913&r=all |
| By: | Andreas, Drichoutis; Rodolfo, Nayga |
| Abstract: | This study further examines the failure of game form recognition in preference elicitation (Cason and Plott, 2014) by making elicitation more cognitively demanding through a cognitive load manipulation. We hypothesized that if subjects misperceive one game for another game, then by depleting their cognitive resources, subjects would misconceive the more-cognitively demanding task for the less-cognitively demanding task at a higher rate. We find no evidence that subjects suffer from a first-price-auction game-form misconception but rather that once cognitive resources are depleted, subjects' choices are better explained by random choice. More cognitively able subjects are more immune to deviations from sub-optimal play than lower cognitively able subjects. |
| Keywords: | Game form recognition; game form misconception; Becker-DeGroot-Marschak mechanism; first price auction; preference elicitation; cognitive load; cognitive resources; Raven test; fluid intelligence |
| JEL: | C80 C91 D44 |
| Date: | 2019–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:97980&r=all |
| By: | Yuanyuan Chen; Shuaizhang Feng; James J. Heckman; Tim Kautz |
| Abstract: | Recent evidence has shown that noncognitive skills matter for success in life and can be shaped through interventions. |
| Keywords: | noncognitive skills, psychological assessment, personality traits, Big Five, incentives |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:3b5cedbf8d1b49d2b55efbc83a0e4695&r=all |
| By: | Fe, Eduardo (University of Manchester); Gill, David (Purdue University); Prowse, Victoria (Purdue University) |
| Abstract: | We investigate how childhood cognitive skills affect strategic sophistication and adult outcomes. In particular, we emphasize the importance of childhood theory-of-mind as a cognitive skill. We collected experimental data from more than seven hundred children in a variety of strategic interactions. First, we find that theory-of-mind ability and cognitive ability both predict level-k behavior. Second, older children respond to information about the cognitive ability of their opponent, which provides support for the emergence of a sophisticated strategic theory-of-mind. Third, theory-of-mind and age strongly predict whether children respond to intentions in a gift-exchange game, while cognitive ability has no influence, suggesting that different measures of cognitive skill correspond to different cognitive processes in strategic situations that involve understanding intentions. Using the ALSPAC birth-cohort study, we find that childhood theory-of-mind and cognitive ability are both associated with enhanced adult social skills, higher educational participation, better educational attainment, and lower fertility in young adulthood. Finally, we provide evidence that school spending improves theory-of-mind in childhood. |
| Keywords: | Cognitive skills; theory-of-mind; cognitive ability; fluid intelligence; children; experiment; strategic sophistication; level-k; bounded rationality; non-equilibrium thinking; intentions; gift-exchange game; competitive game; strategic game; ALSPAC; social skills; adult outcomes; life outcomes; education; fertility; labor market; wages; employment; school spending; childhood intervention. JEL Classification: C91; D91; J24 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:448&r=all |
| By: | Tiziana Assenza; Alberto Cardaci; Domenico Delli Gatti |
| Abstract: | By means of a laboratory experiment, we show that, contrary to standard consumer theory, financially equivalent balance sheet profiles may be perceived as non fungible in a controlled frictionless environment with no probabilistic attributes. A large majority of subjects indeed have a bias in the perception of wealth, such that balance sheet composition matters: for a given net worth with values of assets and debt that are financially certain and risk-free, a greater asset-debt ratio implies greater perceived wealth. The predominance of this bias is explained by low cognitive sophistication and great inattention. Moreover, biased subjects are less patient, less debt averse, more likely to increase spending out of unexpected gains and report greater propensities to consume. A standard optimal consumption choice model, enriched with a rational but inattentive agent à la Gabaix (2014, 2019), aligns our key experimental findings. |
| Keywords: | perceived wealth, cognitive sophistication, behavioral inattention, laboratory experiment, household debt, consumption |
| JEL: | C91 D91 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7992&r=all |