Beyond Homo economicus: evidence from experimental economics (original) (raw)
Related papers
Behavioral Economics and Environmental Policy
Annual Review of Resource Economics, 2012
This article provides an interpretive survey on implications of insights from behavioral economics for environmental policy. In particular, it discusses whether, and if so how, policy implications based on conventional economic theory have to be modified when insights from behavioral economics are considered. More specifically, it discusses concerns for cooperation, fairness, self-image, social approval, and status. Moreover, it addresses potential crowding-out effects, context-dependent and incoherent preferences, risk misperceptions, ambiguity aversion, and regulator bias. We conclude that behavioral economics has a lot to offer environmental economics and that some normative policy recommendations have to be modified. Yet the most fundamental policy recommendations in environmental economics generally prevail and are sometimes even reinforced through behavioral economics insights.
Behavioural economics, hyperbolic discounting and environmental policy
Environmental and resource …, 2010
This paper reviews some recent research in "behavioural economics" with an application to environmental issues. Empirical results from behavioural economics provide a reminder that human behaviour is context-dependent, implying that policy may go awry if based upon models of behaviour which are inappropriate to the contexts in which decisions are made. Recognizing that agents may, in some contexts, systematically make mistakes raises challenging questions about the role of "paternalism" in government policy. The paper considers the research into hyperbolic discounting, and examines the implications for environmental policy. We develop a model of resource management under hyperbolic discounting, which shows that if a planner is unable to commit to a policy, the temptation to re-evaluate the policy in future could lead to an inadvertent collapse in the stocks of a natural resource.
Behavioral Economics and Climate Change Policy
Journal of Economic Behavior & Organization, 2008
The policy recommendations of most economists are based, explicitly or implicitly, on the rational actor model of human behavior. Behavior is assumed to be self-regarding, preferences are assumed to be stable, and decisions are assumed to be unaffected by social context or frame of reference. The related fields of behavioral economics, game theory, and neuroscience have confirmed that human behavior is other regarding, and that people exhibit systematic patterns of decision-making that are "irrational" according to the standard behavioral model. This paper takes the position that these "irrational" patterns of behavior are central to human decision making and therefore, for economic policies to be effective these behaviors should be the starting point. This contention is supported by game theory experiments involving humans, closely related primates, and other animals with more limited cognitive ability. The policy focus of the paper is global climate change. The research surveyed in this paper suggests that the standard economic approach to climate change policy, with its almost exclusive emphasis on rational responses to monetary incentives, is seriously flawed. In fact, monetary incentives may actually be counter-productive. Humans are unique among animal species in their ability to cooperate across cultures, geographical space and generations. Tapping into this uniquely human attribute, and understanding how cooperation is enforced, holds the key to limiting the potentially calamitous effects of global climate change.
Two Cheers and a Qualm for Behavioral Environmental Economics
Environmental and Resource Economics, 2010
Behavioral economics can gain more inroads into environmental economics if we better understand why exchange institutions fail, more effectively reduce health risks and environmental conflicts, encourage more coordination and cooperation, design better incentive systems, more accurately estimate economic measures of value, and promote more protection at less cost. Behavioral economics deserves two cheers for advancing ideas of context-dependence and social preferences, which we illustrate with two examples of recent research.
Non-Instrumental Behavior in an Environmental Public Good Game
This paper reports a puzzling result from an experiment based on an indeflnitely repeated N-player Prisoners' Dilemma game carried out in a PC lab. The experiment used real monetary payofis, and was conducted in the context of international cooperation to curb cli- mate change. It was puzzling that after the experiment, a large ma- jority of subjects reported they were at least partially motivated out of concern for the climate; however, nothing they did in the experi- ment could possibly have had an impact on the climate. We show that subjects acting out of concern for the climate incurred a real cost in monetary terms, and argue that many subjects' behavior in the ex- periment deviated quite fundamentally from instrumental rationality. Although much recent research on public goods provision questions the traditional assumption that players are purely self-regarding, the as- sumption of instrumental rationality is typically preserved. The results reported in this paper go...
Cooperation and Competition Impact Environmental Action: An Experimental Study in Social Dilemmas
Sustainability
Previous research about social dilemmas has identified cooperation as a possible underlying facilitator of proenvironmental behavior. However, there has been no discussion about how manipulating cooperation and competition could influence environmental action experimentally. The current study filled this gap in previous literature by manipulating cooperation and competition in a group of 155 participants and comparing their respective environmental actions. Participants were randomly placed into one of three conditions and primed by writing a short passage regarding a significant personal experience where they acted cooperatively, competitively, or neutrally. It was found that those in the cooperative priming group scored significantly higher on environmental participatory action than people in the competitive priming group. However, no difference was found on environmental leadership action. The results indicated that participatory environmental actions are relatively easier to cha...
Experiments in Environmental Economics and Some Close Relatives
Journal of Economic Surveys, 2006
It is not only the great number of papers written on environment economics that make it worth dealing with this special branch of experimental research, but the environmental problem in all its facets seems to serve as a catalyst for identifying some methodological problems of the experimental method. For this reason, we will not only try to give an overview of recent experiments in environmental economics but also add some thoughts on the methodological implications of this work. We identify three direct connecting factors for the experimental method and environmental economics. First, social dilemmas are, in many cases, at the core of environmental problems. Experiments are able to test theoretical hypotheses for individual behavior in such social dilemma situations. The second connecting factor comes from the field of applied experimental work and can be characterized as the testbedding of institutional arrangements for the solution of environmental problems. The last direct application of experimental methods to environmental economics concerns the individual evaluation of environmental resources.
Mind & Society, 2010
Can human social cognitive processes and social motives be grasped by the methods of experimental economics? Experimental studies of strategic cognition and social preferences contribute to our understanding of the social aspects of economic decisions making. Yet, papers in this issue argue that the social aspects of decision-making introduce several difficulties for interpreting the results of economic experiments. In particular, the laboratory is itself a social context, and in many respects a rather distinctive one, which raises questions of external validity. Keywords Sociality Á Experiments Á Cognition Á Altruistic punishment Behavioural economics is a relatively new discipline, whose practitioners aim to provide a more realistic and empirically-grounded understanding of economic agents. As such, it cannot ignore the effects on economic agents' decisions of:-Their social motives and social cognitive abilities-Their social environment The main rationale for producing this thematic issue is that these social aspects of human decision-making are pervasive and important for economics. We also observe that current behavioural economics mainly relies, for its empirical data, on economic experiments. Whence the question: are laboratory experiments an