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on Neuroeconomics |
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Issue of 2020‒03‒09
three papers chosen by |
| By: | Coville,Aidan; Di Maro,Vincenzo; Dunsch,Felipe Alexander; Zottel,Siegfried |
| Abstract: | This paper investigates the immediate and medium-term behavioral response to an emotional trigger designed to affect biases in intertemporal financial decisions. The emotional trigger is provided by a narrative portraying the catastrophic consequences of poor financial choices. Even when people are fully aware of the most appropriate action to take, cognitive biases may prevent this knowledge from translating into action. The paper contributes to the literature by directly testing the importance of linking emotional stimulus to financial messages, to influence borrowing and saving decisions, and identifying the interaction between emotional stimulus and the opportunity to act on this stimulus. The study randomly assigned individuals to a featured production -- a Nollywood (the Nigerian Hollywood) movie -- on the financial consequences of poor borrowing and saving behavior. This treatment is interacted with the option of opening a savings account at the screening of the movie. At the exit of the screening, individuals in the financial education movie treatment are more likely to open a savings account than individuals in the placebo movie treatment. However, the effects dissipate quickly. When savings and borrowing behavior is measured four months later, the study finds no differences between treatments. The paper concludes that emotional triggers delivered in the context of a one-time feature film might not be enough to secure sustained changes in behavior. |
| Keywords: | Educational Sciences,Primary Metals,Gender and Development,Financial Literacy,Access to Finance |
| Date: | 2019–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8920&r=all |
| By: | Saraf,Priyam; Rahman,Tasmia; Jamison,Julian C |
| Abstract: | Mental health, well-being, and lasting economic outcomes are intimately connected. However, in geographies marked by fragility, conflict, and violence (FCV), entrepreneurs of small and medium size enterprises (SMEs) experience chronic stress and poor mental health on a regular basis. These issues can hamper performance and quality of life for the entrepreneurs, and can dampen the benefits of existing financial and business assistance programs. Few proven rigorous interventions are known. This study tests the hypothesis that a five-week group Cognitive Behavioral Therapy (CBT) training called Problem Management Plus for Entrepreneurs (PM E), in combination with financial assistance, could be more effective at reducing psychological stressors of SME entrepreneurs in FCV contexts than financial assistance alone. Meaningful and statistically significant improvements in mental health were achieved, with improvements persisting and increasing beyond the immediate post-intervention period. Based on analysis of pooled data across two follow-up rounds (at five weeks and three months post-intervention), entrepreneurs in the treatment group experienced statistically significant reduction in the intensity and prevalence of depression and anxiety symptoms (measured by the Patient Health Questionnaire Anxiety and Depression Scale) and higher levels of well-being (measured by the World Health Organization Well-Being Index) compared with the control group. The effect was marked for those experiencing mild/moderate levels of depression and anxiety, suggesting the clinical value of such low touch interventions. Overall, the study demonstrates that empirical research through Randomized Control Trials (RCTs) can be conducted in challenging, FCV settings through appropriate rapid training of local researchers and non-specialist providers (NSPs) at a low cost, yielding scalable programmatic and policy level lessons. |
| Keywords: | Mental Health,Health Care Services Industry,Educational Sciences,Marketing,Private Sector Economics,Private Sector Development Law |
| Date: | 2019–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8872&r=all |
| By: | Noemí Herranz-Zarzoso (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Gerardo Sabater-Grande (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | In this paper, we analyze students’ overconfidence bias regarding potential and actual academic performance under both hypothetical and real monetary incentives. Students enrolled in a Microeconomics course were offered the possibility to set their own goal before performing different types of exams and, immediately after completing them, to postdict their own grade. Controlling for potential driving factors of students’ overconfidence such as their cognitive abilities, academic record, risk preferences, and self-reported academic confidence, we find that real monetary incentives mitigate overestimation of potential achievements and eliminate overestimation of actual achievements. This finding is compelling, given the common interpretation of overconfidence as a conscious bias: if monetary incentives can eliminate subjects’ overconfidence, as our results indicate, it might suggest that overconfidence is not a psychological bias at all. Moreover, the use of real money does not reduce but instead enhances the presence of the Dunning-Kruger bias when we use students’ academic records to measure their actual skill. |
| Keywords: | overconfidence bias, Dunning-Kruger cognitive bias, self-chosen goals, prediction, postdiction, real monetary incentives |
| JEL: | C93 D03 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2020/14&r=all |