Journal of Economic Behavior & Organization

Published by Elsevier
Publications
In three experiments, we propose and find that individuals cheat more when others can benefit from their cheating and when the number of beneficiaries of wrongdoing increases. Our results indicate that people use moral flexibility to justify their self-interested actions when such actions benefit others in addition to the self. Namely, our findings suggest that when people's dishonesty would benefit others, they are more likely to view dishonesty as morally acceptable and thus feel less guilty about benefiting from cheating. We discuss the implications of these results for collaborations in the social realm.
 
Agent-centered models usually consider only individual-level variables in calculations of economic costs and benefits. There has been little consideration of social or cultural history on shaping payoffs in ways that impact decisions. To examine the role of local expectations on economic behavior, we explore whether village affiliation accounts for the variation in Dictator Game offers among the Tsimane of the Bolivian Amazon independently of other factors that could confound such an effect. Our analysis shows that significant differences in altruistic giving exist among villages, village patterns are recognized by residents, and offers likely reflect variation in social expectations rather than stable differences in norms of fairness.
 
This paper presents evidence that when an analyst makes an out-of-consensus forecast of a company's quarterly earnings that turns out to be incorrect, she escalates her commitment to maintaining an out-of-consensus view on the company. Relative to an analyst who was close to the consensus, the out-of-consensus analyst adjusts her forecasts for the current fiscal year's earnings less in the direction of the quarterly earnings surprise. On average, this type of updating behavior reduces forecasting accuracy, so it does not seem to reflect superior private information. Further empirical results suggest that analysts do not have financial incentives to stand by extreme stock calls in the face of contradictory evidence. Managerial and financial market implications are discussed.
 
Just prior to the Civil War, the US government set out on a relentless campaign to eliminate polygamy within the Mormon Church. This paper offers evidence that the political restrictions on the practice of polygamy were the result of rent seeking by potential beneficiaries of such laws (the Edmonds Act of 1882). Polygamy created benefits for women, but reduced the welfare of most men, in a time period when only adult males had the franchise.
 
Choices in the Distributional-Preferences Elicitation Task (Part 2)
presents the main descriptive data, including average performance in Part 1 in
Descriptive Statistics
Performance under Competition and Willingness to Compete
Increase in performance from Stage 1 to Stage 2 conditional on distributional preferences.
We study experimentally the relationship between distributional preferences and competitive behavior. We find that spiteful subjects react strongest to competitive pressure and win in a tournament significantly more often than efficiency-minded and inequality averse subjects. However, when given the choice between a tournament and a piece rate scheme, efficiency-minded subjects choose the tournament most often, while spiteful and inequality averse subjects avoid it. When controlling for distributional preferences, risk attitudes and past performance, the gender gap in the willingness to compete is no longer significant, indicating that gender-related variables explain why twice as many men as women self-select into competition.
 
Using paper and pencil experiments administered in senior centers, we examine decision-making performance in multi-attribute decision problems. We differentiate the effects of declining cognitive performance and changing cognitive process on decision-making performance of seniors as they age. We find a significant decline in performance with age due to reduced reliance on common heuristics and increased decision-making randomness among our oldest subjects. However, we find that increasing the number of options in a decision problem increases the number of heuristics brought to the task. This challenges the choice overload view that people give up when confronted with too much choice.
 
"This paper derives and estimates an index of the relative importance of children in marriage by comparing the effect of husband's income on the actual number of wives in the household with the demand for wives derived from the number of children in the household. Moreover, the paper presents the monogamy bias as a possible explanation for often observed low or negative income effects on fertility." The data are from two surveys carried out around 1971 in Maiduguri, capital of the Northeastern state of Nigeria.
 
This paper describes an evolutionary perspective on human development and wellbeing and contrasts it with the model of self-interest that is prominent in economics. The two approaches have considerably different implications for how human wellbeing might be improved. Research in psychology, prevention science, and neuroscience is converging on an evolutionary account of the importance of two contrasting suites of social behavior-prosociality vs. antisocial behaviors (crime, drug abuse, risky sexual behavior) and related problems such as depression. Prosociality of individuals and groups evolves in environments that minimize toxic biological and social conditions, promote and richly reinforce prosocial behavior and attitudes, limit opportunities for antisocial behavior, and nurture the pursuit of prosocial values. Conversely, antisocial behavior and related problems emerge in environments that are high in threat and conflict. Over the past 30 years, randomized trials have shown numerous family, school, and community interventions to prevent most problem behaviors and promote prosociality. Research has also shown that poverty and economic inequality are major risk factors for the development of problem behaviors. The paper describes policies that can reduce poverty and benefit youth development. Although it is clear that the canonical economic model of rational self-interest has made a significant contribution to the science of economics, the evidence reviewed here shows that it must be reconciled with an evolutionary perspective on human development and wellbeing if society is going to evolve public policies that advance the health and wellbeing of the entire population.
 
A model of fertility demand is constructed that incorporates a shift parameter for wives' motives. The model is used to test the hypothesis that there is an inverse relationship between a wife's taste for children and her level of education. Data from the 1976 survey of Americans' mental health indicate that wives who are motivated by both hope of power and affiliation in social interactions with their husbands do not have less education than wives with other personality dispositions, tend to have more children, and tend to work fewer hours.
 
Descriptive statistics. Averages per phase of the dependent variables conditional on treatment and tax regime. VOLNORM (normalized trading volume), SDRETNORM (standard deviation of normalized returns), ACCRATIO (acceptance ratio – market orders divided by limit orders) and RAD (relative absolute deviation of prices compared to fundamentals). no_Tax: both markets untaxed, Tax_hav: this market untaxed, but other market taxed, TT_uni: this market taxed, but other market untaxed, TT_enc: both markets taxed.
TRADING IN FX MARKETS IS DOMINATED BY TWO MICROSTRUCTURES: exchanges with market makers and OTC-markets without market makers. Using laboratory experiments we test whether the impact of a Tobin tax is different in these two market microstructures. We find that (i) in markets without market makers an unilaterally imposed Tobin tax (i.e. a tax haven exists) increases volatility. (ii) In contrast, in markets with market makers we observe a decrease in volatility in unilaterally taxed markets. (iii) An encompassing Tobin tax has no impact on volatility in either setting. Efficiency does not vary significantly across tax regimes.
 
The daunting complexity of important financial decisions can lead to procrastination. We evaluate a low-cost intervention that substantially simplifies the retirement savings plan participation decision. Individuals received an opportunity to enroll in a retirement savings plan at a pre-selected contribution rate and asset allocation, allowing them to collapse a multidimensional problem into a binary choice between the status quo and the pre-selected alternative. The intervention increases plan enrollment rates by 10 to 20 percentage points. We find that a similar intervention can be used to increase contribution rates among employees who are already participating in a savings plan.
 
Convention wisdom usually suggests that agents should use all the data they have to make the best possible prediction. In this paper it is shown that agents may sometimes be able to make better predictions by throwing away data. The optimality criterion agents adopt is the mean squared criterion.
 
Top-cited authors
David J. Teece
  • University of California, Berkeley
Werner Güth
  • Max Planck Institute for Research on Collective Goods
Richard H. Thaler
  • University of Chicago
Gary Charness
  • University of California, Santa Barbara
John Quiggin
  • The University of Queensland