http://repub.eur.nl/res/concept/jel-D03/ Recent publications classified by JEL Code D03 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/37344/ 2012-08-07T00:00:00Z We investigate the hypothesis that moods can cause temporary fluctuations in risk preferences. In particular, we conduct an economic experiment that first uses standard psychological tools to manipulate individuals’ moods with film clips that induce joy, fear, or sadness and then measures the risk preferences of these individuals and compares these preferences to the preferences of a control group that did not receive a mood induction. Our experiment uses a choice-based measure of risk preferences in the win domain and differentiates among nonexistent, low, and very high financial stakes. We find evidence that sad moods induce risk aversion, although this phenomenon only occurs if the financial stakes are absent or low. We do not find evidence that moods influence risk preferences under high-stakes conditions. The observed sensitivity to variations in the financial incentives in our study reinforces the value of incentive-compatible study designs. Treffers, T. Koellinger, Ph.D. Picot, A.O. http://repub.eur.nl/res/pub/37781/ 2012-07-01T00:00:00Z This paper presents a general technique for comparing the concavity of different utility functions when probabilities need not be known. It generalizes: (a) Yaari's comparisons of risk aversion by not requiring identical beliefs; (b) Kreps and Porteus' information-timing preference by not requiring known probabilities; (c) Klibanoff, Marinacci, and Mukerji's smooth ambiguity aversion by not using subjective probabilities (which are not directly observable) and by not committing to (violations of) dynamic decision principles; (d) comparative smooth ambiguity aversion by not requiring identical second-order subjective probabilities. Our technique completely isolates the empirical meaning of utility. It thus sheds new light on the descriptive appropriateness of utility to model risk and ambiguity attitudes. Baillon, A. Driesen, B. Wakker, P.P. http://repub.eur.nl/res/pub/32664/ 2012-04-26T00:00:00Z As societies are increasingly concerned with social risks, it is important to evaluate risks not only from an individual perspective, but also from a societal one. Many increases in social risk involve a simultaneous increase in risk and inequality. This paper presents an experiment which disentangles concerns for risk and inequality in a social risk context. Subjects choose between different types of allocations of risks over 10 other participants. The allocations differ only in terms of dispersion. We disentangle four types of dispersion: ex ante inequality, ex post inequality, individual risk, and collective risk. The results show that people are averse towards ex ante inequality and individual risk, whereas they are ex post inequality and collective risk seeking. Rohde, I.M.T. Rohde, K.I.M. http://repub.eur.nl/res/pub/32102/ 2012-03-26T00:00:00Z Growing interest in using personality variables in economic research leads to the question whether personality as measured by psychology is useful to predict economic behavior. Is it reasonable to expect values on personality scales to be predictive of behavior in economic games? It is undoubted that personality can influence large-scale economic outcomes. Whether personality variables can also be used to understand micro-behavior in economic games is however less clear. We discuss reasons in favor and against this assumption and test in our own experiment, whether and which personality factors are useful in predicting behavior in the trust or investment game. We can also use the trust game to understand how personality measures fare relatively in predicting behavior when situational constraints vary in strength. This approach can help economists to better understand what to expect from the inclusion of personality variables in their models and experiments, and where further research might be useful and needed. Muller, J. Schwieren, C. http://repub.eur.nl/res/pub/31465/ 2012-02-10T00:00:00Z A series of field and laboratory experiments were conducted in which single-sex groups of male or female students competed in different intellectual tasks to earn money or university grades (N = 291). The supervisor of these groups was one of several young and attractive males or females. The results show that when the supervisor was a female, the performance of male participants was, on average, negatively influenced. Group size moderated this effect such that having a female supervisor produced a negative effect in small groups and a positive effect in large groups of male supervisees. Koellinger, Ph.D. Block, J.H. http://repub.eur.nl/res/pub/30805/ 2012-01-03T00:00:00Z Joy is a potential transient cause of overconfidence. We study its effects on absolute and relative overconfidence in an incentive compatible decision experiment. In the experiment, a general knowledge task of medium difficulty is used to measure confidence. We report two main results. First, joy indeed increases the tendency to be overconfident. Second, making an irrelevant cause of joy salient to people (i.e. by showing them a humorous movie clip) leads to well-calibrated judgments. Our results are consistent with the affect-as-information hypothesis, which suggests that affective states with a non-salient and irrelevant cause have an informative function that can lead to biased judgments. However, if the cause of the affective state is salient and obviously irrelevant (i.e. a humorous movie), the informative function is deactivated, leading to better judgments and decisions. Koellinger, Ph.D. Michl, T. http://repub.eur.nl/res/pub/31002/ 2011-09-01T00:00:00Z Pay for performance (P4P) is increasingly being used to stimulate healthcare providers to improve their performance. However, evidence on P4P effectiveness remains inconclusive. Flaws in program design may have contributed to this limited success. Based on a synthesis of relevant theoretical and empirical literature, this paper discusses key issues in P4P-program design. The analysis reveals that designing a fair and effective program is a complex undertaking. The following tentative conclusions are made: (1) performance is ideally defined broadly, provided that the set of measures remains comprehensible, (2) concerns that P4P encourages "selection" and "teaching to the test" should not be dismissed, (3) sophisticated risk adjustment is important, especially in outcome and resource use measures, (4) involving providers in program design is vital, (5) on balance, group incentives are preferred over individual incentives, (6) whether to use rewards or penalties is context-dependent, (7) payouts should be frequent and low-powered, (8) absolute targets are generally preferred over relative targets, (9) multiple targets are preferred over single targets, and (10) P4P should be a permanent component of provider compensation and is ideally "decoupled" form base payments. However, the design of P4P programs should be tailored to the specific setting of implementation, and empirical research is needed to confirm the conclusions. Eijkenaar, F. http://repub.eur.nl/res/pub/23445/ 2011-06-01T00:00:00Z We examined which type of social account (denying responsibility versus apologizing) following an unfair offer makes recipients more likely to accept the offer in ultimatum bargaining. We identified stress responses to uncertainty as an individual difference factor that should moderate the relative effectiveness of these social accounts. A denial should make acceptance of an unfair offer more likely among recipients who respond to uncertainty with low stress. An apology should make such acceptance more likely among recipients who respond with high stress. Further, we argued that this cross-over interaction should be observed particularly among recipients interacting with a high power allocator. Two ultimatum bargaining experiments supported these ideas. Employing the perspective of victims of unfairness, the present research identifies a relevant individual difference moderator of the effectiveness of social accounts in bargaining situations and identifies power as a situational variable that promotes the expression of this factor. Highlights: ► We examine when denying responsibility and apologizing make unfair ultimatum offers accepted. ► We tested our ideas in two ultimatum bargaining experiments. ► Denying promoted acceptance when recipients responded to uncertainty with low stress. Apologizing promoted acceptance when recipients responded with high stress. ► This interaction was limited to recipients interacting with a high power allocator. ► The perspective of victims of unfairness helps us understand how social accounts work Dijke, M.H. van Cremer, D. de http://repub.eur.nl/res/pub/23693/ 2011-01-01T00:00:00Z This paper discusses Jean-Yves Jaffray’s ideas on ambiguity and the views underlying his ideas. His models, developed 20 years ago, provide the most tractable separation of risk attitudes, ambiguity attitudes, and ambiguity beliefs available in the literature today. Wakker, P.P. http://repub.eur.nl/res/pub/21463/ 2010-01-01T00:00:00Z Abstract: This paper discusses Jean-Yves Jaffray’s ideas on ambiguity and the views underlying his ideas. His models, developed 20 years ago, provide the most tractable separation of risk attitudes, ambiguity attitudes, and ambiguity beliefs available in the literature today. Wakker, P.P. http://repub.eur.nl/res/pub/15564/ 2009-04-21T00:00:00Z In applied economic research computable general equilibrium [CGE] models in which the behavior of economic agents are modeled, are widely used. In many CGE models, the Linear Expenditure System [LES] is used to model behavior of the household sector. The disadvantage of LES is that the Engel curves, describing the relationship between expenditure on a certain commodity and total expenditure, are straight lines. Moreover, the LES does not allow for the existence of inferior commodities, elastic demand and gross substitution. An alternative model for the household block is the Indirect Addilog System [IAS] which is as simple to implement as LES, but which does not suffer from these theoretical deficiencies. Consequently, IAS provides a theoretically richer description of household behavior than LES, while it is as easy to implement. In this paper we test the LES specification against the IAS specification in case one disposes of a budget survey. It is not possible to use a standard likelihood ratio test as both models are not nested. We propose to use the likelihood ratio test for non-nested hypotheses due to Vuong (1989), or, alternatively, the distribution-free test due to Clarke (2007). We apply both tests to the Palestinian Expenditure and Consumption Survey (PECS, 2005) and find that there is overwhelming evidence that the IAS specification is to be preferred to the LES specification. Boer, P.M.C. de Paap, R. http://repub.eur.nl/res/pub/14140/ 2009-01-01T00:00:00Z Using cooperative behavior in economic decision-making settings, we predicted and found that people's susceptibility to priming influences is moderated by two factors: people's chronic accessibility to a behavioral repertoire and people's self-concept activation. In Experiment 1, we show that individuals highly consistent in their social value orientation (SVO) assimilate their behavior to their dispositions rather than to the primes, whereas the opposite effect is obtained among individuals with a low consistent SVO. In Experiment 2, we show that low consistent SVO individuals become less susceptible to priming influences when their self-concept is activated. These studies shed new light on individuals' susceptibility to priming influences on social behavior. Smeesters, D.H.R.V. Yzerbyt, V.Y. Corneille, O. Warlop, L. http://repub.eur.nl/res/pub/14024/ 2008-06-24T00:00:00Z This paper addresses the nature, formalization, and neural bases of (affective) social ties and discusses the relevance of ties for health economics. A social tie is defined as an affective weight attached by an individual to the well-being of another individual (‘utility interdependence’). Ties can be positive or negative, and symmetric or asymmetric between individuals. Characteristic of a social tie, as conceived of here, is that it develops over time under the influence of interaction, in contrast with a trait like altruism. Moreover, a tie is not related to strategic behavior such as reputation formation but seen as generated by affective responses. A formalization is presented together with some supportive evidence from behavioral experiments. This is followed by a discussion of related psychological constructs and the presentation of suggestive neural findings, based on the existing literature. We conclude with some suggestions for future research. Publication forthcoming in 'On the Nature, Modeling and Neural Bases of Social Ties', Daniel E. Houser and Kevin A. McCabe (eds), Neuroeconomics, Advances in Health Economics and Health Services Research, Emerald Insight Publishing. Winden, F.A.A.M. van Stallen, M. Ridderinkhof, K.R. http://repub.eur.nl/res/pub/356/ 2001-11-22T00:00:00Z This thesis aims to empirically examine the role of inter-organizational trust (trading partner trust) in e-commerce participation. By doing so, trust behaviors in business relationships were identified. The findings from ten organizations that formed four bi-directional dyads and two uni-directional dyads contributed to a model of inter-organizational trust within bi-directional dyads. The model identified the development of inter-organizational trust in three stages and identified trust behaviors and characteristics involved in the gradual development of trust from one stage to the next stage, thus providing an awareness of trust behaviors that trading partners need to develop. For example competence trust emphasized on an individual or team's ability and skills to operate e-commerce system and applications (i.e. is at a technical level). Predictability trust examined the reflections and interpersonal experiences of the trading partners based on past experiences, and a consistency of trading partner behaviors. Goodwill trust examined the institutional (i.e. the organization's image, reputation that determines the strategic benefits). Overall, the findings indicated that trust in inter-organizational relationships clearly matter. Puvanasvari Ratnasingam, P. http://repub.eur.nl/res/pub/11760/ 1997-01-01T00:00:00Z Reviews the book "Evolution, Games, and Economic Behavior," by Fernando Vega-Redondo. Janssen, M.C.W.