Financial shocks and the erosion of interpersonal trust: Evidence from longitudinal data
Publication date: Available online 6 July 2018Source: Journal of Economic PsychologyAuthor(s): Michael Jetter, Ingebjørg KristoffersenAbstractThis paper evaluates the effect of financial shocks on interpersonal trust levels, exploiting longitudinal survey data from 22,112 Australians. Using within-individual level variation, we find that trust does not change meaningfully following a positive financial shock (e.g., winning the lottery or receiving an inheritance). However, trust falls sharply following a negative financial shock (e.g., bankruptcy). In terms of magnitude, this effect is approximately equivalent to the effe...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Far but finite horizons promote cooperation in the Centipede game
Publication date: Available online 6 July 2018Source: Journal of Economic PsychologyAuthor(s): Eva M. Krockow, Briony D. Pulford, Andrew M. ColmanAbstractThe sequential Centipede game models repeated reciprocal interaction, in which two players alternate in choosing between cooperation and defection. In an attempt to increase the game’s applicability to real-life decision contexts, we investigated the effects of game length and termination rules on cooperation in the Centipede game. We found that increasing the game length from 8 to 20 decision nodes increased cooperation, but only if the game’s end was known to partic...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Behavioral spillovers in local public good provision: An experimental study
Publication date: August 2018Source: Journal of Economic Psychology, Volume 67Author(s): Andrej Angelovski, Daniela Di Cagno, Werner Güth, Francesca Marazzi, Luca PanaccioneAbstractIn a circular neighborhood, each member has a left and a right neighbor with whom(s) he interacts repeatedly. From their two separate endowment amounts individuals can contribute to each of their two structurally independent public goods, either shared only with their left, respectively right, neighbor. If most group members are discrimination averse and conditionally cooperating with their neighbors, this implies intra- as well as inter-person...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Catch me if you can. Can human observers identify insiders in asset markets?
Publication date: August 2018Source: Journal of Economic Psychology, Volume 67Author(s): Thomas Stöckl, Stefan PalanAbstractSecurities regulators around the globe face the challenge of identifying trades based on privileged information. We study human observers’ ability to identify informed traders and investigate which trading patterns are indicative of informed trading using experimental asset markets. We furthermore test how the behavioral response of informed traders to the threat of detection and punishment impacts observers’ detection abilities. We find that market trading data carries information which correlat...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Can public employment schemes break the negative spiral of long-term unemployment, social exclusion and loss of skills? Evidence from Germany
Publication date: August 2018Source: Journal of Economic Psychology, Volume 67Author(s): Lukas Fervers (Source: Journal of Economic Psychology)
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Third-party punishment: Retribution or deterrence?
Publication date: August 2018Source: Journal of Economic Psychology, Volume 67Author(s): Fangfang Tan, Erte XiaoAbstractWe conduct an experiment to examine the role of retribution and deterrence in motivating third-party punishment. Specifically, we examine how these two motives may play different roles depending on whether a third party is a group or an individual. In a one-shot prisoner’s dilemma game with third-party punishment, we find that groups are more likely to punish when the penalty embeds deterrence rather than mere retribution. By contrast, when individual third parties make punishment decisions, they appear...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
An exploratory experimental analysis of path-dependent investment behaviors
Publication date: August 2018Source: Journal of Economic Psychology, Volume 67Author(s): Richard Deaves, Brian Kluger, Jennifer MieleAbstractIn an experimental setting designed to cleanly partition the disposition effect and various wealth effects, we find evidence that such path-dependent behaviors are related in the sense that those subject to one effect are more or less likely to exhibit another. For example, those subject to the disposition effect are more likely to be subject to the break-even effect. A prospect-theory utility function dominated by curvature rather than loss aversion could account for this finding. Th...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Gender- and education-related effects of financial literacy and confidence on financial wealth
This study examines the influence of actual and perceived financial knowledge (i.e., financial literacy and confidence) on financial wealth. We show that consideration of gender and education as moderators helps to uncover intricate effects. Greater financial literacy leads to higher wealth, with higher education strengthening this effect considerably for women, but not so for men. Men’s wealth also rises in confidence, while there is hardly any confidence effect for women. Our results are robust against the employment of different instrumental variables and confidence measures, consideration of one-time wealth effects a...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Parents’ ambitions and children’s competitiveness
Publication date: August 2018Source: Journal of Economic Psychology, Volume 67Author(s): Menusch Khadjavi, Andreas NicklischAbstractIndividual competitiveness is a personality trait of high importance. While substantial differences between individuals have been documented, the sources of this heterogeneity are not well understood. To contribute to this issue we conduct an incentivized field study with pre-school children. We assess the children’s willingness to compete and relate the inclinations to ambitions and preferences of their parents. Parents’ ambitions concerning their children’s success in professional life...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Attention and novelty: An experimental investigation of order effects in multiple valuation tasks
Publication date: August 2018Source: Journal of Economic Psychology, Volume 67Author(s): Cameron A. Belton, Robert SugdenAbstractThis paper implements a novel experimental design to investigate the presence of order effects across multiple valuation tasks for consumer goods, whereby earlier goods are valued more highly than later goods. The paper presents a novel explanation of order effects, relating to attention and novelty. Typically, multiple valuation tasks for consumer goods use the same good for valuation in each task. In this experiment the type of good valued in each task is varied, allowing two potential mechanis...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Reciprocity anxiety: Individual differences in feeling discomfort in reciprocity situations
Publication date: August 2018Source: Journal of Economic Psychology, Volume 67Author(s): Xiling Xiong, Siyuan Guo, Li Gu, Rong Huang, Xinyue ZhouAbstractProviding gifts, assistance, or favors to benefit consumers may pressure the recipients to adhere to the norm of reciprocity, which has the potential to increase customer patronage and satisfaction. However, these practices can fail to yield desired results if customers feel uncomfortable about receiving things that need to be reciprocated. People differ in the degree to which they feel anxious in a situation that requires them to reciprocate or when they anticipate such a...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
Temptation and cheating behavior: Experimental evidence
This article presents an experiment designed to test the impact of temptation and self-selection into an opportunistic environment on an individual’s likelihood of engaging in dishonest behavior. In doing so, this experiment is the first of its kind to isolate the relationship between temptation and cheating as its primary focus, to create a randomized control group for comparative purposes, and to be conducted without deceiving subjects. The evidence shows that people who tempt themselves to cheat are more likely to cheat. Further, people who self-select into the opportunistic setting cheat to a greater extent than indi...
Source: Journal of Economic Psychology - July 10, 2018 Category: Psychiatry & Psychology Source Type: research
We Should Totally Open a Restaurant: How Optimism and Overconfidence Affect Beliefs
Publication date: Available online 6 July 2018Source: Journal of Economic PsychologyAuthor(s): Stephanie A. Heger, Nicholas W. PapageorgeAbstractWishful thinking, defined as the tendency to over-estimate the probability of high-payoff outcomes, is a widely-documented phenomenon that can affect decision-making across numerous domains, including finance, management, and entrepreneurship. We design an experiment to distinguish and test the relationship between two easily-confounded biases, optimism and overconfidence, both of which can contribute to wishful thinking. We find that optimism and overconfidence are positively cor...
Source: Journal of Economic Psychology - July 7, 2018 Category: Psychiatry & Psychology Source Type: research
Financial shocks and the erosion of interpersonal trust: Evidence from longitudinal data
Publication date: Available online 6 July 2018Source: Journal of Economic PsychologyAuthor(s): Michael Jetter, Ingebjørg KristoffersenAbstractThis paper evaluates the effect of financial shocks on interpersonal trust levels, exploiting longitudinal survey data from 22,112 Australians. Using within-individual level variation, we find that trust does not change meaningfully following a positive financial shock (e.g., winning the lottery or receiving an inheritance). However, trust falls sharply following a negative financial shock (e.g., bankruptcy). In terms of magnitude, this effect is approximately equivalent to the effe...
Source: Journal of Economic Psychology - July 7, 2018 Category: Psychiatry & Psychology Source Type: research
Far but finite horizons promote cooperation in the Centipede game
Publication date: Available online 6 July 2018Source: Journal of Economic PsychologyAuthor(s): Eva M. Krockow, Briony D. Pulford, Andrew M. ColmanAbstractThe sequential Centipede game models repeated reciprocal interaction, in which two players alternate in choosing between cooperation and defection. In an attempt to increase the game’s applicability to real-life decision contexts, we investigated the effects of game length and termination rules on cooperation in the Centipede game. We found that increasing the game length from 8 to 20 decision nodes increased cooperation, but only if the game’s end was known to partic...
Source: Journal of Economic Psychology - July 7, 2018 Category: Psychiatry & Psychology Source Type: research
