Behavioral Economics

Risk Preferences and Aging: The “Certainty Effect” in Older Adults’ Decision Making

by Nina Mazar

Cp-authored with Mara Mather, Marissa A. Gorlick, Nichole R. Lighthall, Jessica Burgeno, Andrej Schoeke, and Dan Ariely, conditional accept at 'Psychology and Aging'

A prevalent stereotype is that people become less risk taking and more cautious as they get older. However, in... more A prevalent stereotype is that people become less risk taking and more cautious as they get older. However, in laboratory studies, findings are mixed and often reveal no age differences. In the current series of experiments, we examined whether age differences in risk seeking are more likely to emerge when choices include a certain option (a sure gain or a sure loss). In four experiments, we found that age differences in risk preferences only emerged when participants were offered a choice between a risky and a certain gamble but not when offered two risky gambles. In particular, Experiments 1 and 2 included only gambles about potential gains. Here, compared with younger adults, older adults preferred a certain gain over a chance to win a larger gain and thus, exhibited more risk aversion in the domain of gains. But in Experiments 3 and 4, when offered the chance to take a small sure loss rather than risking a larger loss, older adults generally exhibited more risk seeking in the domain of losses than younger adults. In a nutshell, our findings suggest that older adults weigh certainty more heavily than younger adults.

Toward a Value Inclusive Theory of Economic Decision-Making: A 'New Science' Model

by Holly A. Bell

Published in 'European Journal of Social Science', 2011

This paper explores one option for the development of a theoretical approach to economic decision-making that goes... more This paper explores one option for the development of a theoretical approach to economic decision-making that goes beyond the mechanical-mathematical models based on the assumptions of rational self-interest and utility maximization. The proposed model incorporates facts, values, relationships, cooperation, learning, and other factors into economic decision-making and applies to both the micro- and macroeconomic levels. While the model is descriptive in nature, it has predictive potential to establish a menu of alternative outcomes or “opportunity sets”. The goal of this discussion is to move the language of economic decision-making away from the mid-nineteenth century language of science toward the concepts associated with the complex systems approach of the ‘new science’.

Prosocial behavior and incentives: Evidence from field experiments in rural Mexico and Tanzania

by Rohit Jindal

Published in Ecological Economics.
Co-authored with John Kerr and Mamta Vardhan.

Incentive-based schemes for natural resource conservation are based on the premise that offering payments to groups of... more Incentive-based schemes for natural resource conservation are based on the premise that offering payments to groups of land users will motivate them to organize collectively to provide environmental services. In contrast, research from behavioral economics shows that introducing monetary incentives can undermine collective action that is motivated by social norms. In such a case payment could have perverse impacts. In view of this dichotomy, we conducted choice and field experiments in rural Mexico and Tanzania to test the response of prosocial behavior to incentives. The field experiments involved voluntary participation in real communal tasks under different incentive structures. Findings suggest that payments help raise participation where people are otherwise uninterested, but that participation in communal tasks can be high irrespective of the incentive if social norms favoring participation are present. In Tanzania, high individual payments do not undermine participation although they appear to reduce people's satisfaction from the task relative to when there is no payment. In Mexico, group payments made through village authorities yield lower participation where people distrust leaders. Challenges to conducting field experiments in our research settings limit what we can conclude from our work, but the findings raise important points and suggest areas for further research.

The Demographics of cooperation: Evidence from a field experiment in the Gori-Ganga Basin1

by Sujoy Chakravarty

Experimental evidence on product adoption in the presence of network externalities

by Sujoy Chakravarty

Recursive expected utility and the separation of attitudes towards risk and ambiguity: an experimental study

by Sujoy Chakravarty

Weak Aversion to GM Foods: Experimental Evidence from India

by Sujoy Chakravarty

Are You Risk Averse Over Other People's Money?

by Sujoy Chakravarty

Attitudes towards risk and ambiguity across gains and losses.

by Sujoy Chakravarty

Experimental Economics: A Survey

by Sujoy Chakravarty

The effect of minimal group framing on a dictator game experiment

by Sujoy Chakravarty

Voluntary Contribution in the Field: An Experiment in the Indian Himalayas

by Sujoy Chakravarty

Risk, Ambiguity-Gains, Losses

by Sujoy Chakravarty

Indian Institute of Management, Ahmedabad Working Paper 2006

Limits of Social Influence on Giving: Who is Affected When and Why?

by Rene Bekkers

Working paper presented at a seminar “Social Effects on Giving“, 24 February 2012, Royal Over-seas League, London. http://www.bris.ac.uk/cmpo/events/2012/charitablegiving/

In this paper I present evidence from tax records and three large scale field experiments testing social influence... more In this paper I present evidence from tax records and three large scale field experiments testing social influence effects on giving in the Netherlands. The experiments are conducted among
university alumni (n=6,672) and among large random samples of the Dutch population (n=1,474; n=1,765). Also tax records are used to test peer effects among a very large random sample
(n=172,947) of citizens in the Netherlands. The experiments show evidence for positive but weak social information effects on small donations. Social information effects are stronger in
conditions in which people are actively imagining what others are giving. The tax records show that amounts donated by high level donors (exceeding 1% of income) are strongly sensitive to
changes in the tax price as well as to changes in giving by other high level donors in the area of residence.

ANÁLISIS EXPERIMENTAL DE LA JUSTICIA: DECISIONES DISTRIBUTIVAS Y TIEMPOS DE REACCIÓN EN UN JUEGO DE DICTADOR

by Juan Giraldo

Co-authored with Edgar Benitez, Universidad ICESI (Cali-Colombia)

In press: A. Casas (Edit.) Métodos Experimentales en las Ciencias Sociales. Bogotá: Editorial Pontificia Universidad Javeriana.

La economía experimental, sus metodologías y resultados han planteado nuevas preguntas y exigencias a los... more La economía experimental, sus metodologías y resultados han planteado nuevas preguntas y exigencias a los convencionales supuestos metodológicos del mainstream en economía y por tanto, permite que en una investigación que propone un análisis cognitivo de las decisiones distributivas que se realizan bajo condiciones experimentales del Juego del Dictador, con el objetivo de explorar el tipo de sistemas de soporte cognitivo que caracterizan las decisiones de los agentes, sea posible identificar si estas son producto del razonamiento o del uso de recursos intuitivos. Los resultados de un juego del dictador en dos fases aplicado a 103 estudiantes universitarios permiten concluir que no todos los jugadores que dividen por mitades siguen una regla normativa de distribución y que su decisión está guiada por el uso de un recurso heurístico de decisión que les permite tomar una decisión soportada en un sistema cognitivo no racional.

Palabras clave: Psicología de los agentes económicos, Decisiones distributivas, Sistemas de soporte cognitivo, Heurísticos, Juego del dictador

The Brain Drain: Implications for Regional Economic Integration in the Expanding European Union.

by Matthew Jelavic

Jelavic, M. (2012). The brain drain: Implications for regional economic integration in the expanding European Union. In B. Chapalet, & M. Le Berre (Eds.), Producing New Knowledge on Innovation Management. Presses Universitaires de Grenoble, 99 – 111.

This paper provides a review and conceptual analysis of issues surrounding regional economic integration and the... more This paper provides a review and conceptual analysis of issues surrounding regional economic integration and the potential for inter-country brain drain within the expanding European Union (EU). As the EU expands eastward, it absorbs millions of highly skilled knowledge workers and opens opportunities for western European organisations to capitalise on this workforce. The migration of these skilled workers is a macro-exercise in eastern European knowledge management, and could have far-reaching implications at the regional, industry and organisational levels. This paper explores the context and implications of knowledge worker movement across fading borders.

Social Ties and Coordination on Negative Reciprocity: The Role of Affect

by Ernesto Reuben

Journal of Public Economics, 2008, 92: 34-53. (Ernesto Reuben and Frans van Winden)

This is an experimental study of negative reciprocity in the case of multiple reciprocators. We use a three-player... more This is an experimental study of negative reciprocity in the case of multiple reciprocators. We use a three-player power-to-take game where a proposer is matched with two responders. We compare a treatment in which responders are anonymous to each other (strangers) with one in which responders know each other from outside the lab (friends). We focus on the responders' decisions, beliefs, and emotions. Our main findings are: (1) friends punish the proposer more than strangers, (2) friends are more likely to coordinate their punishment (without communication), and (3) both punishment and coordination are explained by the responders' emotional reactions.

Public Goods Provision and Sanctioning in Privileged Groups

by Ernesto Reuben

Journal of Conflict Resolution, 2009, 53: 72-93. (Ernesto Reuben and Arno Riedl)

In public-good provision, privileged groups enjoy the advantage that some of their members find it optimal to supply a... more In public-good provision, privileged groups enjoy the advantage that some of their members find it optimal to supply a positive amount of the public good. However, the inherent asymmetric nature of these groups may make the enforcement of cooperative behavior through informal sanctioning harder to accomplish. In this article, the authors experimentally investigate public-good provision in normal and privileged groups with and without decentralized punishment. The authors find that compared to normal groups, privileged groups are relatively ineffective in using costly sanctions to increase everyone's contributions. Punishment is less targeted toward strong free riders, and they exhibit a weaker increase in contributions after being punished. Thus, the authors show that privileged groups are not as privileged as they initially seem.

Is Mistrust Self-Fulfilling?

by Ernesto Reuben

Economics Letters, 2009, 104: 89-91. (Ernesto Reuben, Paola Sapienza, and Luigi Zingales)

We study experimentally the effect of expectations on whether trust is repaid. Subjects respond with untrustworthy... more We study experimentally the effect of expectations on whether trust is repaid. Subjects respond with untrustworthy behavior if they see that little is expected of them. This suggests that guilt aversion plays an important role in the repayment of trust.

The Importance of Emotions for the Effectiveness of Social Punishment

by Ernesto Reuben

Economic Journal, 2009, 119: 1534-1559. (Ernesto Reuben and Astrid Hopfensitz)

This paper experimentally explores how the enforcement of cooperative behavior in a social dilemma is facilitated... more This paper experimentally explores how the enforcement of cooperative behavior in a social dilemma is facilitated through institutional as well as emotional mechanisms. Recent studies emphasize the importance of anger and its role in motivating individuals to punish free riders. However, we find that anger also triggers retaliatory behavior by the punished individuals. This makes the enforcement of a cooperative norm more costly. We show that in addition to anger, "social" emotions like guilt need to be present for punishment to be an effective deterrent of uncooperative actions. They play a key role by subduing the desire of punished individuals to retaliate and by motivating them to behave more cooperatively in the future.