Behavioral Economics Commons^™

Are Individuals Fickle-Minded?, Mathew D. Mccubbins, Mark Turner

Faculty Scholarship

Game theory has been used to model large-scale social events — such as constitutional law, democratic stability, standard setting, gender roles, social movements, communication, markets, the selection of officials by means of elections, coalition formation, resource allocation, distribution of goods, and war — as the aggregate result of individual choices in interdependent decision-making. Game theory in this way assumes methodological individualism. The widespread observation that game theory predictions do not in general match observation has led to many attempts to repair game theory by creating behavioral game theory, which adds corrective terms to the game theoretic predictions in the hope …

“Robbing Peter To Pay Paul”: Economic And Cultural Explanations For How Lower-Income Families Manage Debt, Laura M. Tach, Sara Sternberg Greene

Faculty Scholarship

This article builds upon classic economic perspectives of financial behavior by applying the narrative identity perspective of cultural sociology to explain how lower-income families respond to indebtedness. Drawing on in-depth qualitative interviews with 194 lower-income household heads, we show that debt management strategies are influenced by a desire to promote a financially responsible, self-sufficient social identity. Families are reluctant to ask for assistance when faced with economic hardship because it undermines this identity. Because the need to pay on debts is less acute than the need to pay for regular monthly expenses like rent or groceries, debts receive a lower …

Brief Of Financial Economists As Amici Curiae In Support Of Respondents, Ernest A. Young

Faculty Scholarship

No abstract provided.

New Operations Over Interval Valued Intuitionistic Hesitant Fuzzy Set, Florentin Smarandache, Said Broumi

Branch Mathematics and Statistics Faculty and Staff Publications

Hesitancy is the most common problem in decision making, for which hesitant fuzzy set can be considered as a useful tool allowing several possible degrees of membership of an element to a set. Recently, another suitable means were defined by Zhiming Zhang [1], called interval valued intuitionistic hesitant fuzzy sets, dealing with uncertainty and vagueness, and which is more powerful than the hesitant fuzzy sets. In this paper, four new operations are introduced on interval-valued intuitionistic hesitant fuzzy sets and several important properties are also studied.

Differential Responding By Rhesus Monkeys (Macaca Mulatta) And Humans (Homo Sapiens) To Variable Outcomes In The Assurance Game, Audrey E. Parrish, Sarah F. Brosnan, Bart J. Wilson, Michael J. Beran

Economics Faculty Articles and Research

Behavioral flexibility in how one responds to variable partner play can be examined using economic coordination games in which subjects play against a variety of partners and therefore may need to alter their behavior to produce the highest payoff. But how do we study this behavioral flexibility once players have settled on a response? Here, we investigated how responding by rhesus monkeys (Macaca mulatta) and humans (Homo sapiens) playing a computerized single-player version of a coordination game, the Assurance game, changed as a function of the variable responses (Stag/Hare) generated by multiple simulations (SIMs). We were interested in whether individuals …

Correlation Between Crime, Oxytocin, And Generosity, Alexa R. Clark

Scripps Senior Theses

This thesis examines the relationship between the type of crime of which an inmate is convicted, the change in oxytocin level, and the level of generosity of that inmate. The level of generosity is measured using a behavioral economics task called the Ultimatum Game. Studies of oxytocin have demonstrated that it is connected to generosity so it is illuminating to study it in conjunction with the generosity measure obtained in the Ultimatum Game. The results of the experiment indicate that there is no correlation between the type of crime of which an inmate is convicted and his generosity level.

Robust Design Review Conversations, Andy Dong, Massimo Garbuio, Dan Lovallo

Design Thinking Research Symposium

Design reviews and executive conversations at the point of strategic decision-making share an important outcome: they both result in the (nearly) irrevocable allocation of resources to pursue a design concept or strategic option. Our study aims to contribute to the strategic decision-making scholarship by investigating the robustness of these conversations. We define a robust design review conversation as one in which the participants discuss evidence in favor of and against the option and at the same time propose new hypotheses to explain or resolve the evidence in favor of and against the option, hypotheses that can eventually be tested. We …

Consumption, Risk And Prioritarianism, Matthew D. Adler, Nicolas Treich

Faculty Scholarship

In this paper, we study consumption decisions under risk assuming a prioritarian social welfare function, namely a concave transformation of individual utility functions. Under standard assumptions, there is always more current consumption under ex ante prioritarianism than under utilitarianism. Thus, a concern for equity (in the ex ante prioritarian sense) means less concern for the risky future. In contrast, there is usually less current consumption under ex post prioritarianism than under utilitarianism. We discuss the robustness of these results to learning, and to other forms of prioritarian social welfare functions.

Coexistence Of Gm, Conventional And Organic Food Not Always Possible, Konstantinos Giannakas

CAFIO: Policy Research Group Policy Pagers

The coexistence of genetically modified (GM) products with their conventional and organic counterparts has been one of the most scrutinized issues surrounding the introduction of products of agricultural biotechnology into the agri-food system. Fears that the widespread adoption of GM products will drive their conventional (and, perhaps, organic) counterparts out of the market have been countered by arguments that their presence enhances the equilibrium product variety in the market. Central to the argument is, of course, the possibility of coexistence of GM, conventional and organic products with the main focus having been on farm production systems and the prospect of …

Gmos And Iprs Are Key Weapons In Fight Against Hunger, Konstantinos Giannakas

CAFIO: Policy Research Group Policy Pagers

The introduction of genetically modified organisms (GMOs) into the food system and the assignment of intellectual property rights (IPRs) for plant genetic resources are among the most notable features of the increasingly industrialized agri-food marketing system of numerous developed and developing countries around the world. IPRs have provided innovating firms with incentives to aggressively pursue improvements of crop characteristics (such as herbicide tolerance, insect and virus resistance, drought tolerance and increased nutritional value) through gene splicing techniques, and the agronomic benefits associated with the genetically modified (GM) products have resulted in their embrace by a significant number of agricultural producers …

Ad Hoc Disaster And Crop Insurance Programs May Reduce The Use Of Risk-Reducing Conservation Tillage Practices, Karina Schoengold, Ya Ying, Russell Headlee

CAFIO: Policy Research Group Policy Pagers

There is growing concern that the risks facing agricultural producers are increasing due to several factors that include the predicted effects of climate change leading to more frequent floods, droughts, and higher temperatures as well greater use of agricultural outputs for nonfood energy products.

These risks are partially managed through federal agricultural programs. Ad hoc disaster payments have frequently been used to provide financial support.

A Bayesian Model Of Fertility Decisions In Relationship To Female Labor Force Participation, Rebecca C. Wardrop

Senior Independent Study Theses

Due to the increasing number of women in the labor force, opportunity costs associated with labor force participation are becoming an important factor in fertility decisions. Further, these decisions are assumed to be dynamic as the opportunity costs change as a woman progresses through her career. A Bayesian statistical model , which allows the distribution of the likelihood of having children to be updated as information is gathered, lends itself to the dynamicity of the decision-making process. A generalized model for fertility decisions in terms of labor force participation is created. I also discuss potentials for implementation and furthering the …

Uniqueness Of Equilibrium In Directed Search Models, Jaehong Kim, Gabriele Camera

Economics Faculty Articles and Research

We study a decentralized trading model as in [7], where a finite number of heterogeneous capacity-constrained sellers compete for a finite number of homogeneous buyers, by posting prices. This "directed search" model is known to admit symmetric equilibria; yet, uniqueness has proved elusive. This study makes two contributions: a substantive contribution is to establish uniqueness of symmetric equilibrium; a methodological contribution is to develop a tool based on directional derivatives to characterize equilibrium.

Tax, Command -- Or Nudge?: Evaluating The New Regulation, Brian Galle

Georgetown Law Faculty Publications and Other Works

This Article compares for the first time the relative economic efficiency of “nudges” and other forms of behaviorally-inspired regulation against more common policy alternatives, such as taxes, subsidies, or traditional quantity regulation. Environmental economists and some legal commentators have dismissed nudge-type interventions out of hand for their failure to match the revenues and informational benefits taxes can provide. Similarly, writers in the law and economics tradition argue that fines are generally superior to non-pecuniary punishments.

Drawing on prior work in the choice-of-instruments literature, and contrary to this popular wisdom, I show that nudges may out-perform fines, other Pigouvian taxes, or …

"Nudging" Better Lawyer Behavior: Using Default Rules And Incentives To Change Behavior In Law Firms, Nancy B. Rapoport

Scholarly Works

This article examines how incentives in law firms can affect lawyer behavior and suggests some possible changes to incentive structures and default rules that might improve the ethical behavior of lawyers.

In the changing landscape of law practice — where law firm profits are threatened by such changes as increased pressure from clients to economize and the concomitant opportunities for clients to shop around for the most efficient lawyers — are there ways to change how things are done in law firms so that firms can provide more efficient and ethical service? This article suggests that an understanding of cognitive …

Our Town: A Neighborhood Assessment, Christina Davila, Ramya Kumaran, Calvin P. Lesueur, Brett Michaelson, Renee Petrucelli, Katie Raynor, Daniel Sheets-Poling, Katie Simpson, Matthew Tomlin, Rachelle Ann Wilson

Community Project Design and Management Reports - Sociology

This report addresses the question: What factors have the strongest impact on communal and individual well-being in different neighborhoods in McLean County? It is one part of the larger United Way of McLean County Community Assessment 2014, which will evaluate the assets and needs of McLean County by focusing on respondents’ experiences receiving health and human services. Our findings are based on data from five key informant interviews and four focus groups. This information was collected from four geographically and economically distinct neighborhoods: rural Lexington, East Bloomington, Normal, and West Bloomington. Common themes that emerged from these sessions are: the …

The Undergrad's Dilemma: N-Person Games And Information Asymmetry In Undergraduate Course Selection, Michael A. Verlezza

Honors Program Theses and Projects

In 2012, the White House released its College Scorecards for institutions of higher education. In their overview, the White House states that Bridgewater State University in Bridgewater, MA, has a six-year graduation rate of just 51.7 percent. By approaching the question of low graduation rates as a consequence of economic inefficiency, my research led me to treat undergraduate course selection as a Nash n-person game. From there, my investigation led to an analysis of information asymmetry as I attempted to identify the various internal and external information sources driving course selection. Specific attention was given to Bridgewater State’s internal system, …

Short-Term Inflation Forecasting Models For Nigeria, Sani I. Doguwa, Sarah O. Alade

CBN Journal of Applied Statistics (JAS)

Short-term inflation forecasting is an essential component of the monetary policy projections at the Central Bank of Nigeria. This paper proposes four short-term headline inflation forecasting models using the SARIMA and SARIMAX processes and compares their performance using the pseudo-out-of-sample forecasting procedure over July 2011 to September 2013. According to the results the best forecasting performance is demonstrated by the model based on the all items CPI estimated using the SARIMAX model. This model is, therefore, recommended for use in short-term forecasting of headline inflation in Nigeria. The forecasting performance up to eight months ahead, of the models based on …

An Efficient Two Sample Capture-Recapture Model With High Recaptures, Danjuma Jibasen, Yusuf J. Adams

CBN Journal of Applied Statistics (JAS)

This paper proposed an efficient two sample capture-recapture model (Ma) with high recaptures and compared it with the existing models like the model of no factor effect (Mo), behavioral response model (Mb) and the Petersen model (Ms), using simulated data. We found that the Petersen model provides a better estimate of the population size when the observations follow a hypergeometric distribution and the population is overestimated when recapture is high. It was also found that the proposed model provides a better estimator of the population size than the existing ones when the recapture is high. This model is particularly useful …

Causal Relationship Between Stock Market Index And Exchange Rate: Evidence From Nigeria, Abdulrasheed Zubair

CBN Journal of Applied Statistics (JAS)

This paper uses Johansen’s cointegration to test for the possibility of cointegration and Granger-causality to estimate the causal relationship between stock market index and monetary indicators (exchange rate and M2) before and during the global financial crisis for Nigeria, using monthly data for the period 2001–2011. Results suggest absence of long-run relationship before and during the crisis. The Granger-causality tests show a uni-directional causality running from M2 to ASI before the crisis while during the period of the crisis there is absence of causality between the variables. This suggests that ASI show responsiveness to M2. Thus, absence of the direct …