nep-neu 2022-10-10 papers

on Neuroeconomics

Issue of 2022‒10‒10
three papers chosen by

Social Protection and Foundational Cognitive Skills during Adolescence: Evidence from a Large Public Works Programme By Freund, Richard; Favara, Marta; Porter, Catherine; Behrman, Jere R.
Anchored Strategic Reasoning By Ivanova-Stenzel, Radosveta; Seres, Gyula
Cognitive Imprecision and Stake-Dependent Risk Attitudes By Mel Win Khaw; Ziang Li; Michael Woodford

Social Protection and Foundational Cognitive Skills during Adolescence: Evidence from a Large Public Works Programme

By:	Freund, Richard (University of Oxford); Favara, Marta (University of Oxford); Porter, Catherine (Lancaster University); Behrman, Jere R. (University of Pennsylvania)
Abstract:	Many low- and middle-income countries have introduced Public Works Programmes (PWPs) to fight poverty. PWPs provide temporary cash-for-work opportunities to boost poor households' incomes and to provide better infrastructure to local communities. While PWPs do not target children directly, the increased demand for adult labour may affect children's development through increasing households' incomes and changing household members' time uses. This paper expands on a multidimensional literature showing the relationship between early life circumstances and learning outcomes and provides the first evidence that children from families who benefit from PWPs show increased foundational cognitive skills (FCS). We focus on four child FCS: inhibitory control, working memory, long-term memory, and implicit learning. Our results, based on unique tablet-based data collected as part of a 20- year longitudinal survey, show positive associations of family participation in the Productive Safety Net Programme (PSNP) in Ethiopia during childhood on long-term memory and implicit learning, with weaker evidence for working memory. These associations appear to be strongest for children whose households were still PSNP participants in the year of data collection. We find suggestive evidence that, the association with implicit learning may be operating through children's time reallocation away from unpaid labour responsibilities, while the association with long-term memory may be due to the programme's success in remediating nutritional deficits caused by early life rainfall shocks. Our results suggest that policy interventions such as PWPs may be able to mitigate the effects of early poverty on cognitive skills formation and thereby improve children's potential future outcomes.
Keywords:	foundational cognitive skills, Ethiopia, public works programmes, PSNP, skills development
JEL:	J24 I2 I1
Date:	2022–09
URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp15551&r=

Anchored Strategic Reasoning

By:	Ivanova-Stenzel, Radosveta (TU Berlin); Seres, Gyula (HU Berlin)
Abstract:	Anchoring is a robust behavioral phenomenon modeled predominantly as a bias in individual judgment. We propose a game-theoretic model that considers players’ beliefs about others’ behavior as a mediator for the effect of the anchor on a player’s choice. The results establish that anchoring in strategic interactions reported in the literature can be rationalized by anchored beliefs about the opponents’ intentions. Notwithstanding, we also demonstrate that a player might adjust away from rather than toward the anchor in games where choices are strategic substitutes.
Keywords:	anchoring bias; auctions; games; incomplete information; strategy;
JEL:	D01 D91 C72
Date:	2022–01–25
URL:	http://d.repec.org/n?u=RePEc:rco:dpaper:314&r=

Cognitive Imprecision and Stake-Dependent Risk Attitudes

By:	Mel Win Khaw; Ziang Li; Michael Woodford
Abstract:	In an experiment that elicits subjects' willingness to pay (WTP) for the outcome of a lottery, we confirm the fourfold pattern of risk attitudes described by Kahneman and Tversky. In addition, we document a systematic effect of stake sizes on the magnitude and sign of the relative risk premium, holding fixed both the probability that a lottery pays off and the sign of its payoff (gain vs. loss). We further show that in our data, there is a log-linear relationship between the monetary payoff of the lottery and WTP, conditional on the probability of the payoff and its sign. We account quantitatively for this relationship, and the way in which it varies with both the probability and sign of the lottery payoff, in a model in which all departures from risk-neutral bidding are attributed to an optimal adaptation of bidding behavior to the presence of cognitive noise. Moreover, the cognitive noise required by our hypothesis is consistent with patterns of bias and variability in judgments about numerical magnitudes and probabilities that have been observed in other contexts.
JEL:	C91 D03 D81 D87
Date:	2022–09
URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:30417&r=

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