Working Papers
Aspiration Levels and Educational Choices: an Experimental Study abstract pdf
with Lionel Page and Claude Montmarquette (2006)
forthcoming in Economics of Education Review
Cognitive Consistency, the Endowment Effect and the Preference Reversal Phenomenon abstract pdf
with Serge Blondel (2006)
A Behavioral Laffer Curve: Emergence of a Social Norm of Fairness in a Real Effort Experiment abstract pdf
with David Masclet and Claude Montmarquette (2007)
Perception séquentielle, cohérence cognitive et primauté du présent sur le futur abstract pdf
with Mickaël Mangot and Stéphane Rinaudo (2005)
Learning from Experience or Learning from Others? Inferring Informal Training from a Human Capital Earnings Function with Matched Employer-Employee Data abstract pdf
with Guillaume Destré and Michel Sollogoub (2006)
forthcoming in Journal of Socio-Economics, Special Issue on Behavior of the Firm .
Job Satisfaction and Quits abstract pdf
with Claude Montmarquette and Véronique Simonnet
Labour Economics 14 (2007), 251-268.
The Formation of
Social Preferences: Some Lessons from Psychology and Biology
abstract
pdf
with Claude Meidinger and Benoît Rapoport
in Handbook on the Economics of Giving,
Altruism and Reciprocity , S.C. Kolm, and J. Mercier-Ythier (Eds.), Amsterdam: Elsevier
(2006), 545-613.
Preference Formation, School Dissatisfaction and Risky Behavior of Adolescents abstract pdf
with Youenn Lohéac and Bertrand Fayolle
Journal of Economic Psychology 27 (2006), 165-183
Reported Job Satisfaction: What Does it Mean? abstract pdf
with Claude Montmarquette
Journal of Socio-Economics 33 (2004), 135-151
Perception Séquentielle et Rationalité Limitée abstract pdf
Journal des Economistes et des Etudes Humaines 14 (2004), 63-77
An Economist's View of Schooling Systems abstract pdf
with Nathalie Damoiselet, Gérard Lassibille and Lucia Navarro-Gomez
in Human Capital over the Life Cycle, C. Sofer (ed.), Cheltenham, UK: Edward Elgar, (2004), 53-68
On the Rationality of Cognitive Dissonance abstract pdf
with Serge Blondel
in The Expansion of Economics: Towards an Inclusive Social Science,
S. Grossbard-Schechtman et C. Clague (eds), MESharpe, Inc., (2002), 227-238
Expected Utility and Cognitive Consistency abstract pdf
(1999)
A Microeconometric Study of Theatre Demand abstract pdf
with Claude Montmarquette
Journal of Cultural Economics 20 (1996), 25–50
Cognition in Seemingly Riskless Choices and Judgments
with Claude Montmarquette
Rationality and Society 8 (1996), 167-185.
Abstracts
Aspiration Levels and Educational Choices: an Experimental Study
with Lionel Page and Claude Montmarquette (2006)
Cognitive Consistency, the Endowment Effect and the Preference Reversal Phenomenon
with Serge Blondel (February 2006)
We exhibit three non-standard cases of preference reversal (PR) between choices and valuations of bets. PR patterns diverge whether asking prices or bidding prices are used to elicit values, a finding not well explained by contingent weighting theory. PR also occurs when a lottery is confronted with a sure gain, which is inconsistent with regret theory. Lastly, PR does not require small probabilities of winning for the riskier bet. The endowment effect arises as a surprising consequence of the WTA/WTP disparity when the probabilities of winning get close to certainty. Due to the presence of a small uncertainty regarding goods which one does not own and to a discontinuity of WTP close to certainty, people underestimate the value of goods not owned but do not overestimate the value of goods owned. We consider a new theory of choice under risk, cognitive consistency (CC) theory (Lévy-Garboua 1999), which can predict both standard and non-standard cases of PR, the WTA/WTP disparity and the endowment effect in the context of single choices with a single parameter added to risk aversion. We show that the BDM mechanism and the random lottery incentive system are incentive-compatible if subjects have preferences which satisfy CC theory. A new experiment is designed to test the predictions of CC versus other theories of PR and the endowment effect. The experimental results strongly support CC predictions, reject the regret theory explanation for PR and the loss aversion explanation for the endowment effect, and allow direct estimation of risk aversion and the additional parameter of CC theory with no restriction on the utility function.
JEL: C91, D81
Keywords: experiments, risk, preference reversal, endowment effect, cognitive consistency, sequential perception.
A Behavioral Laffer Curve: Emergence of a Social Norm of Fairness in a Real Effort Experiment pdf
with David Masclet and Claude Montmarquette (April 2007)
This paper demonstrates, through a controlled experiment, that the “Laffer curve” phenomenon does not always reflect a conventional income - leisure trade-off. Whether out of reason or out of emotion, taxpayers may also be willing to punish intentionally unfair tax setters by working less than they would under the same exogenous circumstances. We conduct a real effort experiment in which a player A (the "tax receiver") is matched with a player B (the "worker") to elicit the conditions under which tax revenues will increase under a certain threshold and decrease thereafter. We ran four different treatments by manipulating work opportunities and the power to tax. Consistent with the history of tax revolts, the working partner overreacts to the perceived unfairness of taxation when the tax rate exceeds 50%, most strongly so in the high effort treatment. Using the tools of social choice theory, we propose a simple way to endogenize pre-play intentions as some kind of social preferences. Consistent with the results, our model predicts the emergence of a social norm of fairness under asymmetric information with heterogeneous players, and elicits the equitable and emotional patterns of punishments and rewards. The social norm allows players to coordinate tacitly on a “focal equilibrium”, which offers a solution to the indeterminacy raised by the Folk theorem for infinitely-repeated games and a behavioral justification for the tit-for-tat strategy
JEL: C72 C91 H30 J22
Key words: Taxation and labor supply, Laffer curve, experimental economics, social norms and sanctions, informational asymmetry.
Perception séquentielle, cohérence cognitive et primauté du présent sur le futur pdf
with Mickaël Mangot and Stéphane Rinaudo (November 2005)
Dans cet article, nous proposons un modèle de choix dynamique reposant sur l’hypothèse d’un individu rationnel ayant une connaissance imparfaite de ses préférences temporelles. Au moment du choix, l’individu qui recherche la cohérence cognitive réconcilie deux cognitions successives : sa préférence normative -représentée par le modèle d’utilité escomptée- qu’il perçoit avec plus ou moins de précision et une préférence myope dictée par le contexte de la décision. Le modèle permet de rendre compte des incohérences dynamiques obtenues dans les investigations expérimentales sans recourir à l’hypothèse contestable d’un « moi » morcelé dans le temps. Nous traitons le cas particulier d’une préférence myope pour la récompense la plus proche dans le temps et testons le modèle à partir de données expérimentales.
In this article, we propose a model of dynamic choice built on the hypothesis of a rational individual with an imperfect knowledge of his own time preference. At the time of choosing, the individual who seeks cognitive consistency reconciles two successive cognitions: his normative preference – represented by the discounted utility model- that he perceives with more or less precision and a myopic preference imposed by the context of the decision. The model explains dynamic inconsistencies obtained in experiments without referring to the questionable hypothesis of a “multiple self”. We handle the particular case of a myopic preference for the most immediate reward and test the model on experimental data.
JEL: A12, D81, D90
Mots-clés : perception séquentielle, cohérence cognitive, effet de primauté, choix dynamique, escompte hyperbolique, rationalité limitée.
Learning from Experience or Learning from Others? Inferring Informal Training from a Human Capital Earnings Function with Matched Employer-Employee Data pdf
with Guillaume Destré and Michel Sollogoub ( 2006)
A model of informal training which combines learning from own experience and learning from others is proposed in this paper. It yields a closed-form solution that revises Mincer-Jovanovic’s (1981) treatment of tenure in the human capital earnings function. We estimate the structural parameters of this non-linear model on a large French cross-section with matched employer-employee data. We find that workers on average can learn from others ten percent of their own human capital on entering one firm, and catch half of their learning from others’ potential in just two years. The private marginal returns to education are declining with education as more educated workers have less to learn from others and share the social returns of their own education with their less qualified co-workers. The potential for learning from others on the job varies across jobs and establishments, and this provides a new distinction between imitation jobs and experience jobs. Workers in imitation jobs, who learn most from others, tend to have considerably longer tenure than workers in experience jobs. Although workers in experience jobs can learn little from others, we find that they learn a lot by themselves. We document several analogies between the imitation jobs/experience jobs “dualism” and the primary/secondary jobs and firms’ dualism implied by the dual labor market theory. However, our binary classification of jobs depicts the data more closely than the dual theory categorization into primary-type and secondary-type establishments. Competition prevails between jobs and firms but jobs differ by their learning technology.
JEL: J24, J31, I2
.Keywords: Human capital earnings functions, matched employer-employee data, informal training, learning from others, learning from experience, returns to tenure, social returns to education, labor market dualism.
The Formation of Social Preferences: Some Lessons from Psychology and
Biology
pdf
with Claude Meidinger and Benoît Rapoport
(2004)
Forthcoming in Handbook on the Economics of Giving,
Altruism and Reciprocity,
S.C. Kolm, and J. Mercier-Ythier (Eds.), Amsterdam: Elsevier (2006).
The goal of this paper is to draw some lessons for economic theory from research in psychology, social psychology and, more briefly, in biology, which purports to explain the “formation” of social preferences. We elicit the basic mechanisms whereby a variety of social preferences are determined in a variety of social contexts. Biological mechanisms, cultural transmission, learning, and the formation of cognitive and emotional capacities shape social preferences in the long or very long run. In the short run, the built-in capacities are utilized by individuals to construct their own context-dependent social preferences. The full development of social preferences requires consciousness of the individual’s similarities and differences with others, and therefore knowledge of self and others. A wide variety of context-dependent social preferences can be generated by just three cognitive processes: identification of self with known others, projection of known self onto partially unknown others, and categorization of others by similarity with self. The self can project onto similar others but is unable to do so onto dissimilar others. The more can the self identify with, or project onto, an other the more generous she will be. Thus the self will find it easier to internalize and predict the behavior of an in-group than an out-group and will generally like to interact more with the former than with the latter. The main social motivations can be simply organized by reference to social norms of justice or fairness that lead to reciprocal behavior, some kind of self-anchored altruism that provokes in-group favoritism, and social drives which determine an immediate emotional response to an experienced event like hurting a norm’s violator or helping an other in need.
Nous dégageons les leçons qui peuvent être tirées des recherches consacrées, en psychologie, en psychologie sociale et en biologie, à la « formation » des préférences sociales. Nous identifions les mécanismes fondamentaux par lesquels se déterminent les préférences sociales en fonction du contexte des interactions sociales. A long terme, ce sont les mécanismes biologiques, la transmission culturelle, l’apprentissage, et la formation des capacités cognitives et émotionnelles. A court terme, les capacités qui se sont formées sont mobilisées par l’individu pour construire ses propres préférences sociales en fonction du contexte. Un développement complet des préférences sociales exige une conscience des ressemblances et des différences entre soi et les autres, qui passe par une connaissance de soi et des autres. Trois processus cognitifs suffisent a générer une grande variété de préférences sociales : l’identification de Soi a d’autres connus, la projection d’un Soi connu sur d’autres en partie inconnus, et la catégorisation des autres d’après leur ressemblance a Soi. Ego ne peut se projeter que sur d’autres qui lui ressemblent. Plus il parvient a s’identifier à un autre ou à se projeter sur lui, plus il sera généreux envers lui. Par conséquent, Ego trouvera plus facile d’internaliser et de prévoir le comportement d’un en-groupe que d’un hors-groupe et préfèrera en général interagir avec l’un qu’avec l’autre. Les principales motivations sociales sont de trois types : l’adhésion à des normes sociales de justice ou d’équité qui engendre une réciprocité de comportements, une forme d’altruisme auto-centré qui conduit à favoriser son en-groupe, et des pulsions sociales qui déclenchent une réaction émotionnelle immédiate à un évènement ressenti, comme faire du mal à celui qui a enfreint la norme ou aider celui qui est dans le besoin.
JEL : B40, D63, D64, D70, D80, Z13
Keywords: formation of social preferences, psychology, social psychology, biology.
Perception Séquentielle et Rationalité Limitée pdf
Journal des Economistes et des Etudes Humaines 14 (2004), 63-77
Des individus logiques percevant l’information de manière séquentielle sont soumis à une dissonance cognitive et une incertitude dynamique qui limitent naturellement l’efficacité ex post de leurs choix. Du point de vue normatif, qui ignore cette incertitude dynamique, leur rationalité apparaît limitée. L’hypothèse de perception séquentielle est introduite dans un modèle de révision bayésienne de la préférence contingente lors d’un choix répété. Ce modèle prédit à la fois le phénomène de dissonance cognitive étudié par Festinger (1957) et la formation d’une habitude stable. Il montre aussi comment un homme ordinaire peut être rationnel sans disposer de capacités d’information et de calcul démesurées et, pour les mêmes raisons, subir l’influence disproportionnée d’impressions dénuées de valeur normative dans les choix ou les jugements qu’il porte. La perception séquentielle et la cohérence cognitive offrent une alternative crédible au paradigme des biais cognitifs pour expliquer tous les comportements humains qui réfutent la théorie normative des choix et des jeux.
JEL : A12, D00, D11, D80.
Mots-clés: rationalité limitée, perception séquentielle, dissonance cognitive, incertitude dynamique, formation d’habitude, biais cognitifs.
Rational individuals who perceive information sequentially are confronted to cognitive dissonance and dynamic uncertainty in a way that sets a natural limit to the ex post efficiency of their choices. From the normative perspective which ignores this dynamic uncertainty, their rationality seems limited. Sequential perception is assumed in a model of Bayesian revision of the contingent preference in a repeated choice. This model predicts both the cognitive dissonance phenomenon studied by Festinger (1957) and the formation of stable habits. It also shows how an ordinary man can be rational with bounded informational and computational abilities and, for the same reasons, give a disproportionate weight to impressions without any normative value in his own choices and judgments. Sequential perception and cognitive consistency offer a credible alternative to the cognitive bias paradigm for predicting anomalies in choice and game behavior.
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Job Satisfaction and Quits pdf
with Claude Montmarquette and Véronique Simonnet (July 2005)
Forthcoming in Labour Economics
We test the wealth maximization theory of quitting behavior on the German Socioeconomic Panel (1985-2003). With the interpretation of job satisfaction as an expression of the experienced preference for the present job against available alternatives, the propensity to stay in the present job is simply related to the residual of a job satisfaction equation. We show that this residual is a better predictor of quits than the overall level of satisfaction. Furthermore, we validate a simple extension of the economic theory of quits for which uncertainty in the expectation of future events plays a decisive role.
JEL: J28, J63, C23.
Keywords: Voluntary quit, job satisfaction, surprises, wealth maximization model.
Preference Formation, School Dissatisfaction and Risky Behavior of Adolescents pdf
with Youenn Lohéac and Bertrand Fayolle
Journal of Economic Psychology ( 2006), 165-183
School dissatisfaction is an important component of the subjective well-being of adolescents associated with “risky behavior” like drug use, unprotected sex, norm violations and illegal behavior. We extend the standard human capital model to joint human investment (education) and disinvestment (risky behavior). Based on this model, we develop a general dynamic framework to analyze the preference formation of children and behavioral change at school. Once an educational norm is set by adults, children can rationally deviate from this norm, while staying at school, after experiencing bad surprises like a school failure. The same type of dynamic equation can be used in a sequence to predict education, satisfaction with school, and a host of risky behavior. We test these assumptions with a unique panel data set on American adolescents attending middle or high school. School dissatisfaction is found to have a significant positive effect upon nine different types of risky behavior.
PsycINFO classification: 2820; 3230; 3233; 3236; 3920.
JEL classification: D12; D83; I12; I21; I31; Z13.
Key words: Education; Satisfaction; Risky behavior; Preference formation; Economic behavior of children.
Reported Job Satisfaction: What Does it Mean? pdf
with Claude Montmarquette
Journal of Socio-Economics 33 (2004), 135-151
We emphasize the major influences of experienced utility gaps or regret, i.e. the difference between what happened and what might have happened, on job satisfaction. The main prediction that we test is that job satisfaction correlates with the wage gaps experienced in the past and present, holding other job-related satisfactions constant, with the possible exception of young workers. We further test that this effect of wage gaps on job satisfaction declines with working experience. We find evidence on a Canadian cross-section that the past matters.
JEL: J28, C25.
Keywords: Job Satisfaction, experienced wage gaps.
An Economist's View of Schooling Systems pdf
with Nathalie Damoiselet, Gérard Lassibille and Lucia Navarro-Gomez
in Human Capital over the Life Cycle, C. Sofer (ed.), Cheltenham, UK: Edward Elgar, (2004), 53-68
This paper presents a simple theory of schooling systems based on the assumption that schooling systems produce two kinds of human capital: a general ability-enhancing knowledge referred to as "education", and many types of skill-specific knowledge referred to as vocational "training". The theory predicts that the differentiation of supply of training leads to the expansion of general education as well as training. If skill-specific talents can be detected later than the general ability, early sorting of pupils by ability will not be efficient. The duality and efficiency of school production is illustrated by a sample of 16 schooling systems of industrialised countries.
Keywords: schooling systems, education and training, differentiation, sorting, efficiency.
On the Rationality of Cognitive Dissonance pdf
with Serge Blondel
in The Expansion of Economics: Towards an Inclusive Social Science,
S. Grossbard-Schechtman et C. Clague (eds), MESharpe, Inc., (2002), 227-238
Cognitive dissonance or cognitive consistency theory, as we understand it, does not presume irrational behavior although it is inconsistent with normative rationality. Previous discussions have overlooked that cognitive dissonance implied dynamic uncertainty. Once this dimension of choice is restored, it becomes obvious why normative rationality does not properly describe fully rational behavior. Aiming at cognitive consistency is then the optimal way to behave.
Expected Utility and Cognitive Consistency pdf
(1999)
One may reason before making a decision on perceiving potential objections to expected utility-preference. Cognitive consistency is attained by making full use of available information, i.e. consistent preference and reasons. I show that coincidence between the rational choice and the normative preference requires perfect consciousness, and I provide maximizing rules of decision conditional on preference which are valid with imperfect consciousness. A necessary and sufficient condition for expected utility to be descriptively valid is given. Under risk, the rational choice converges towards expected utility through unconscious learning. Many well-known paradoxes and anomalies of choice, evaluation and information are solved for well-behaved preferences.
JEL: D0, D8.
Keywords: expected utility, cognitive consistency, doubt, information, unconscious reasoning.
Avant de prendre une décision,un raisonnement peut survenir parce que l’on perçoit des objections potentielles à sa préférence-espérance d’utilité. On atteint la cohérence cognitive en utilisant toute l’information disponible,à savoir la préférence cohérente et ces raisons. Je montre que la coïncidence entre le choix rationnel et la préférence normative requiert une conscience parfaite,et j’indique des règles de décision maximisatrices conditionnelles à la préférence qui s’appliquent lorsque la conscience est imparfaite. En situation de risque,le choix rationnel converge vers l’espérance d’utilité par un apprentissage inconscient. La théorie résout de nombreux paradoxes et anomalies bien connus du choix,de l’évaluation et de l’information pour des préférences transitives et régulières.
JEL : D0, D8Mots-clés : espérance d’utilité, cohérence cognitive, doute, information, raisonnement inconscient
.
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A Microeconometric Study of Theatre Demand pdf
with Claude Montmarquette
Journal of Cultural Economics 20 (1996), 25–50
We develop a model of theatre demand with learning by consuming, and test some of its implications on a large random sample of theatregoers and non-theatregoers. This seems to be the most comprehensive econometric study of demand for the theatre fromindividual data.We hypothesize that each time the consumer watches a play, he experiences a degree of pleasant or unpleasant surprise on the basis of which he will revise his future expectations of his own taste. The learning phase is likely to be unusually long for highly differentiated cultural goods. Our set of data contains unique information about the full price and the fixed cost of theatre, the objective quality of the outing, past experience of and taste for the theatre, and consumption of substitute leisure activities such as reading, television and cinema. Our methodology and data enable us to infer price elasticity on survey data from knowledge of theatregoing experience and taste. After controlling for many variables, we conclude that demand for the theatre is price-elastic, which contradicts previous estimates on aggregate time-series data. Moreover, we estimate demand conditional on past attendance after controlling for selectivity bias. Satisfaction reported by consumers after the last play is also estimated and interpreted as an ordinal conditional choice.
JEL: Z1, L82Key words: theatre demand, learning by consuming, individual data, conditional choice and satisfaction