Archivio per 4 febbraio 2015



04
Feb
15

Zukunftsangst! Fear of (and Hope for) the Future and Its Impact on Life Satisfaction

See on Scoop.itBounded Rationality and Beyond
Abstract: The thoughts that an individual has about the future contribute substantially to their life satisfaction in a positive or negative direction. This is a result found via five different methods, some of which control for personality and disposition and the potential endogeneity of thoughts and life satisfaction. The reduction in life satisfaction experienced by individuals who report being pessimistic is greater than that for well-known objective statuses like unemployment. Including individuals’ thoughts about the future substantially increases the explanatory power of standard life satisfaction models. Life satisfaction is made up of objective and subjective factors and methods exist to account for their potential endogeneity to enhance our understanding of well-being. This investigation is an example of such an analysis combining a subjective factor, thoughts about the future (treated as endogenous), with more standard objective factors to aid understanding regarding well-being. 
See on diw.de

04
Feb
15

Think Twice Before Running! Bank Runs and Cognitive Abilities

See on Scoop.itBounded Rationality and Beyond
Abstract: We assess the impact of cognitive abilities on withdrawal decisions in a bank-run game. In our setup, depositors choose sequentially between withdrawing or keeping their funds deposited in a common bank. They may observe previous decisions depending on the information structure. Theoretically, the last depositor in the sequence of decisions has a dominant strategy and should always keep the funds deposited, regardless of what she observes (if anything). Recognizing the dominant strategy, however, is not always straightforward. If there exists strategic uncertainty (e.g., the last depositor has no information about predecessors’ decisions) the identification of the dominant strategy requires harder thinking than when there is not strategic uncertainty (e.g., the last depositor is informed about all previous decisions). We find that cognitive abilities, as measured by the Cognitive Reflection Test (CRT), predict withdrawals in the presence of strategic uncertainty (participants with higher abilities tend to identify the dominant strategy more easily) but the CRT does not predict behavior when there is no strategic uncertainty.
See on econ.core.hu

04
Feb
15

Cognitive Ability and the Effect of Strategic Uncertainty

See on Scoop.itBounded Rationality and Beyond
Abstract: How is one’s cognitive ability related to the way one responds to strategic uncertainty? We address this question by conducting a set of experiments in simple 2 x 2 dominance solvable coordination games. Our experiments involve two main treatments: one in which two human subjects interact, and another in which one human subject interacts with a computer program whose behavior is known. By making the behavior of the computer perfectly predictable, the latter treatment eliminates strategic uncertainty. We find that subjects with higher cognitive abilities are more sensitive to strategic uncertainty than those with lower cognitive abilities. 
See on amse-aixmarseille.fr

04
Feb
15

Normative Behavioral Economics Based on Unconditional Love and Moral Virtue

See on Scoop.itBounded Rationality and Beyond
Abstract: An important difficulty in many models of behavioral economics is that preferences are endogenous and unstable. Therefore, preferences may not provide the most desirable yardstick to evaluate social states. This paper proposes unconditional love as a candidate for such a yardstick. The concept of unconditional love, although sublime, is often hard to apply for practical policy recommendations. We propose an intermediary learning stage, where learning to unconditionally love is desirable, and policies that promote such learning are deemed to be good. We illustrate the use of this principle in models of endogenous altruism.
See on imes.boj.or.jp

04
Feb
15

Defaults and Donations: Evidence from a Field Experiment

See on Scoop.itBounded Rationality and Beyond
Abstract: We study how website defaults affect consumer behavior in the domain of charitable giving. In a field experiment that was conducted on a large platform for making charitable donations over the web, we exogenously vary the default options in two distinct choice dimensions. The first pertains to the primary donation decision, namely, how much to contribute to the charitable cause. The second relates to an “add-on” decision of how much to contribute to supporting the online platformitself. We find a strong impact of defaults on individual behavior: in each of our treatments, the modal positive contributions in both choice dimensions invariably correspond to the specified default amounts. Defaults, nevertheless, have no impact on aggregate donations. This is because defaults in the donation domain induce some people to donate more and others to donate less than they otherwise would have. In contrast, higher defaults in the secondary choice dimension unambiguously induce higher contributions to the online platform.
See on diw.de




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