Behavioral economics is the integration of concepts from micro-economics into behavior analysis. Most of the research in behavioral economics has been done with non-human subjects and with drugs as reinforcers. This study represents an extension of previous research to assess money as a reinforcer with humans as subjects. The participants in this study solved math problems to earn money at various unit prices. Results indicate that demand of money adhered to the law of demand in that consumption decreased as unit prices increased. An underlying assumption is that consumption should be equivalent at different compositions of unit price. Replications of either the same or different compositions of unit price indicated that there were some discrepancies in consumption in this study.

Thesis (M. Com. (Economics))--University of the Witwatersrand, Faculty of Commerce, Law and Management, School of Economic & Business Sciences, 2017 / In this study, I use a computer game based lab experiment to investigate the existence of the Endowment Effect. Previous empirical evidence has been criticised for failing to adequately account for the effects of transactions costs and other frictions. The structure of the game used in this study allows me to control for these effects, and the results provide evidence in support of the existence of an Endowment Effect. The effect is found to be stronger when transactions costs are present. / GR2018

The entire literature on adverse selection in the labour market spawned by Greenwald (1986, Review of Economic Studies, 63(3)) has been built, somewhat unwittingly, on the assumption that firms forget the type of a worker after the worker quits. In many contexts, this assumption is implausible. The first three chapters of this thesis therefore explore an alternative approach to modelling labour markets with asymmetric information by assuming firms will never forget a worker's type. The first chapter turns the standard Greenwald result on its head by showing that if the worker knows her own type and productivity is unchanging, the possibility of competitive wage offers from fully-informed previous employers means that adverse selection will never persist. Job changing frictions can cause a semi-separating equilibrium where the more productive workers have their type revealed whilst the least productive workers receive a pooling payoff. But even where asymmetric information persists there is no adverse selection because job changing frictions shield potential employers from the winner's curse. The second chapter investigates the robustness of the non-persistence of adverse selection result where previous employers are asymmetrically informed. The result is found to be robust where firms bid for the worker under a closed but not an open auction. The third chapter finds that, if workers are not sure of their exact value to their employer, there will be an adversely selected stream of job changers in equilibrium, even as the probability of a worker quitting for exogenous reasons approaches zero. Less able workers are quickly revealed as such, whilst more able workers have their type revealed gradually. The fourth substantive chapter of this thesis investigates the widely observed paradox that, despite what traditional economics would lead us to believe, there can be such a thing as too much choice. The model provides a formal theoretical explanation for this phenomenon using the regret theory of Loomes and Sugden (1982, Economic Journal, 92(368)). When options are few it is shown that enlarging the choice set improves welfare, but when options are many, a "less is more" phenomenon emerges. In some cases, excess search options can decrease search.

This dissertation consists of three essays in Behavioral Labor Economics. The first two chapters contribute to the understanding of non-standard preferences of individuals in the workplace, and the third studies how cultural values affect firm behavior. The first chapter studies the incentive effects of top-down favoritism in employee promotions on workers and its organization-wide productivity consequences, and provides evidence on social preferences and fairness concerns among co-workers. Using data from public high schools in four Chinese cities, I first show that teachers with hometown or college ties to the school principal are twice as likely to be promoted, after controlling for characteristics on their application profiles and their value-added in teaching. I then use the results from a survey in which I asked teachers to select anonymous peers to promote from a pool of applicants applying for promotion to infer each teacher’s revealed fairness views regarding promotion qualifications. Contrasting these with actual past promotions in turn allows me to measure if and when a teacher might have observed unfair promotions in her own school in the past. Exposure to unfair promotions adversely affects non-applicant teachers’ output, lowering their value-added and raising the probability that high-value-added teachers quit. The value-added effect appears to be driven primarily by teachers’ social preferences for peer workers and the consequent erosion of their morale when peers suffer unfair treatment, while the quitting effect comes mainly from non-favored prospective applicants’ career concerns as they learn about the principal’s bias and leave due to poor promotion prospects. These adverse spillover incentive effects lead to a substantial reduction in school-wide output, which is only slightly mitigated by increased productivity among favored teachers. Finally, a transparency reform that required principals to disclose to their peers the profiles of teachers that apply for promotion reduced the principals’ bias and improved the overall productivity of schools. The second chapter documents daily targeting behavior in workers’ labor supply decisions. Using a novel dataset on the daily production of a group of piece-rate manufacturing workers combined with their quasi-random daily income shocks from lunch break card game gambling, I show that the workers’ afternoon labor supply responds negatively to instantaneously-paid quasi-random gambling income, although wages are paid monthly. The workers’ labor supply decisions were consistent with daily mental accounting and reference dependence where the target was set on the sum of the face - valued daily (receivable) labor and (paid) unearned income, as opposed to the neoclassical model of inter-temporal labor supply. Estimation of two structural models of daily labor supply yields a coefficient of loss aversion parameter of 1.8 to 2.0, significantly different from the neoclassical value of 1; and individual specific loss aversion structural estimates correlate positively with survey measures. Using estimated preference parameters, I back out the implied total wage elasticity of daily labor supply as well as a sizable negative reference-dependent component of it. This study overcomes the common identification issues in the daily labor supply literature by exploiting high-frequency, actively taken-up and unanticipated income shifters that are independent of other labor supply and demand confounders. In the third chapter, we show that many employers anchor their wages at establishments outside of the home region to headquarter levels, and begin to study the consequences. Our analysis makes use of an unusual 2005-2015 establishment-year level dataset of average wages by narrowly-defined occupation. The dataset covers 1,800 large employers that span many different sectors and each operate in a subset of 170 observed capital city locations. We show that, across the occupational skill range—including for low-skill support staff— the average wage multinationals pay domestic workers in a given occupation at foreign establishments is robustly and remarkably highly correlated with the average wage they pay workers in the same occupation in the home country. We then instrument for headquarter wage levels with changes in home country minimum wage laws and show that externally imposed wage increases at home causally raise wages abroad. The relationships we establish between headquarters’ and their foreign establishments’ wage levels and wage changes are both driven by employers from inequality-averse societies. Occupations are more (less) likely to be removed from, and less (more) likely to be added to the foreign establishments (headquarters) of such employers after a (minimum wage-induced) wage increase originating at the headquarter. Our results point towards the existence of “wage cultures” that influence how production is organized across space.

This dissertation comprises three essays in behavioral and information economics. The first, “Estimating Information Cost Functions in Models of Rational Inattention,” uses laboratory data to analyze the properties of cost functions in models of rational inattention and determine their functional forms. The second, “Promises and Pronouncements,” uses a laboratory experiment to determine whether the propensity to tell monetarily advantageous lies depends on the ability to control the final outcome; in other words, whether reneging on a commitment (breaking a promise) is more or less likely than lying about something out of one’s control (making a false pronouncement). The third, “Costly Information and Multiattribute Choice” provides an information-theoretic explanation for some commonly observed phenomena in consumer choice when goods are defined by multiple characteristics.

The thesis consists of three stand-alone essays. Defaults are influential, cheap to change, and therefore of great interest to policymakers. However, it is still unclear what explains their influence. Optimal Defaults and Uncertainty presents a model in which uncertainty contributes to default inertia: decision makers may be content to stick with the default and avoid the costs of learning their optimal decision. The socially optimal default policy I find differs significantly from optimal policy in models where procrastination alone drives default inertia. I show that alternative policy measures may be more effective in improving welfare, and so the effectiveness of defaults may be more limited than previous models suggest. In Screening Salient Thinkers, I explore a model of second-degree price discrimination in which consumers with context-dependent preferences choose from a menu of price-quality bundles. Specifically, the range of prices and qualities in the menu determines the weight that consumers give to the two attributes when they evaluate bundles. 'Focusing thinkers' place more weight on the attribute that varies the most within the menu; for 'relative thinkers' the opposite is true. The monopolist exploits both types of bounded rationality. In the focusing case the cost of asymmetric information is directly reduced; with relative thinkers the monopolist can use a 'decoy good' to extract higher revenues from all consumers. Finally How Long Is Now? explores an important degree of freedom in models of present-biased preferences: when does the present end and the future begin? First I present evidence that illustrates how economists have used this degree of freedom to explain behaviour in a variety of different contexts. Second, using a novel, between-subjects experimental design, I test a hypothesis that endogenises the cut-off between the present and the future: the 'as soon as possible' effect. The effect predicts that the soonest option in a menu fixes the present horizon and implies a time-specific form of menu dependence. The experimental data collected does not support the hypothesis and this result appears robust to a number of analytical approaches.

Three groups of participants were exposed to different unit price sequences. Unit prices for all groups ranged from unit price 1 to 21. Analyses of demand curves, response rates, session duration, and elasticity coefficients suggest that the sequence of exposure to unit prices can affect the elasticity of demand. In addition, the size of unit price contrast, direction of unit price change, and proximity to experimental milestones also may affect the consumption of monetary reinforcers.

行为经济学试图分析决策过程对经济行为和结果的影响。我的博士论文由四篇独立的论文组成，运用经济学和心理学的理论视角，研究了个人和群体的决策和行为模式。本论文探讨的问题包括建立社会关系的过程中交互性的影响、队列中的信息外部性、群体决策中较差决定的概率支配、引领型消费者和追随型消费者的不同行为模式等。 / 在题为“社会资本与电信客流失：移动网络中交互性“的第一篇论文中， 我实证检验交互性在发展社会关系中的作用。基于包括网络连接度、社会关系强度、交互性等社会资本要素，我设计了一种预测电信客流失的方法。该算法基于源自用电信服务数据的社会资本度量和服务状态，因此它能较为容易的运用于现实数据库和客关系管理。 / 在题为“一种顺序行为中的信息积累模型“的第二篇论文中，我研究了顺序模式的社会学习过程，提出了一种基于多阶段决策过程的度量信息积累程度和评介信息瀑布稳定性的数学模型。理论结果反映了信息瀑布中行为模式的两个主要特征：信息积累和边际效应递减。 / 在题为“社会学习和群体的智慧：网络中的同步行为“的第三篇论文中，我分析了个人行为通过学习策略在网络中蔓延的现象。这种基于网络的同步学习是通过仿真和数值实验得到了直观的。本研究证明，网络中的同步学习对个体和群体表现有促进作用。同时，其促进的程度是存在阈值的。 / 在题为“社会化媒体中的学习：社会化线索与决策偏差“的第四篇论文中, 我通过分析网络爬虫收集的互联网数据，探讨了社会化媒体中学习策略的影响。这项研究表明，流行性产品的选择中起主导作用的是社会化线索。社会化线索放大了产品之间的销量的差异。此外，我还发现了社会化线索的两种不对称性：（1）社会学习过程中人们对长期变化和短期变化的非对称敏感性；（2）领导型用和追随型用提供好坏口碑的非对称性。这些发现表明，社会线索在决策过程中是存在偏差的。 / Behavioral economics tries to understand the impact of decision process on economic behaviors and outcomes. Utilizing theoretical lenses of psychology and economics, my dissertation, composed of four essays, studies the behavioral pattern of individuals and groups to tell philosophies behind some interesting phenomena, such as reciprocity in developing social relations, information externality in queues, probable dominance of collectively bad decisions, the contradicting behavioral pattern of leaders and followers when facing bad choices, and etc. / In my first essay entitled “Social Capital and Telecom Churn: Reciprocity in Mobile Telecom Networks“, I empirically examine the role of reciprocity in the development of social relations. Based on multiple dimensions of social capital, e.g., network connectivity, social tie strength, internal network ratio, and reciprocity, I develop a method to predict telecom churns. The algorithm is based on social capital derived from historical usage patterns and service status, thus it is easy to be implemented with customer database. / In my second essay entitled “A Model of Information Aggregation in Sequential Moves“, I investigate sequential learning process and propose a mathematical model that measure information aggregation and evaluate the stability of informational cascades with a multi-stage decision process. The results capture two primary behavioral aspect of informational cascade: information aggregation and diminishing sensitivity. / In my third essay entitled “Social Learning and the Wisdom of Crowd: Simultaneous Moves in Network“, I investigate the phenomenon of social contagion through learning strategies among individuals in the network. This network-based simultaneous learning process is simulated via computer programme to seek insights on the effect of simultaneous learning on collective and individual actions. Through numerical experiment, it demonstrats that learning in network can be effective while bad decisions have chance to dominate, and there is a threshold for collective decision quality. / In my forth essay entitled “Learning in Social Media: Social Cues and Decision Biases“, I investigate the effect of learning strategy in the context of social media with internet usage dataset collected by web crawler. This study demonstrates that choices based on social cues dominate for popular products, and it exaggerates the inequality among products. Besides, two types of asymmetries exist for social cues: (1) Asymmetric sensitivity for immediate and accumulative changes in social learning process; and (2) Asymmetric behavioral pattern in providing WOMs for leaders and followers. These findings suggest that social cues may be biased. / Essay 1. Social capital and telecom churn: reciprocity in mobile telecom networks -- essay 2. A cognitive model of information aggregation in sequential moves -- essay 3. Social learning and the wisdom of crowd: simultaneous moves in network -- essay 4. Learning in social media: social cues and decision biases. / Detailed summary in vernacular field only. / Detailed summary in vernacular field only. / Detailed summary in vernacular field only. / Detailed summary in vernacular field only. / Detailed summary in vernacular field only. / Hu, Hao. / Thesis (Ph.D.)--Chinese University of Hong Kong, 2013. / Includes bibliographical references. / Abstracts also in Chinese. / PREFACE --- p.1 / SOCIAL CAPITAL AND TELECOM CHURN: RECIPROCITY IN MOBILE TELECOM NETWORKS --- p.6 / Chapter 1. --- INTRODUCTION --- p.7 / Chapter 2. --- LITERATURE REVIEW --- p.7 / Chapter 2.1. --- Service Continuity and Churn --- p.7 / Chapter 2.2. --- Social Capital in the Network --- p.9 / Chapter 3. --- THEORETICAL FRAMEWORK --- p.11 / Chapter 3.1. --- Network Connectivity --- p.12 / Chapter 3.2. --- Social Tie Strength --- p.12 / Chapter 3.3. --- Internal Network Ratio --- p.13 / Chapter 3.4. --- Reciprocal Social Norm --- p.13 / Chapter 3.5. --- Service Continuity and Churn --- p.14 / Chapter 4. --- EMPIRICAL ANALYSIS --- p.14 / Chapter 4.1. --- Research Setting and Data Collection --- p.14 / Chapter 4.2. --- Variables and Proxies --- p.14 / Chapter 4.3. --- Social Capital and Service Continuity --- p.17 / Chapter 4.4. --- Service Continuity and Churn --- p.20 / Chapter 5. --- PREDICTIVE MODEL FOR TELECOM CHURN --- p.21 / Chapter 5.1. --- Performance Assessment Criteria --- p.21 / Chapter 5.2. --- Bench Mark Model --- p.21 / Chapter 5.3. --- Three-Stage Model --- p.23 / Chapter 6. --- DISCUSSION AND CONCLUDING REMARKS --- p.25 / Chapter 6.1. --- Theoretical Extension --- p.25 / Chapter 6.2. --- Managerial Implication --- p.26 / Chapter APPENDIX I --- MEASUREMENT CLASSIFICATION --- p.27 / Chapter APPENDIX II --- DATA DESCRIPTION --- p.28 / REFERENCES --- p.30 / A COGNITIVE MODEL OF INFORMATION AGGREGATION IN SEQUENTIAL MOVES --- p.32 / Chapter 1. --- INTRODUCTION --- p.33 / Chapter 2. --- THEORETICAL FRAMEWORK --- p.34 / Chapter 2.1. --- Conceptual Background --- p.34 / Chapter 2.2. --- Decision Scenarios --- p.35 / Chapter 2.3. --- Hypothesis --- p.38 / Chapter 3. --- ANALYTICAL MODEL --- p.40 / Chapter 3.1. --- Model Setup --- p.40 / Chapter 3.2. --- Sequential Analysis --- p.41 / Chapter 4. --- NUMERICAL ANALYSIS --- p.43 / Chapter 4.1. --- Margin Analysis --- p.43 / Chapter 4.2. --- Product Complexity --- p.44 / Chapter 4.3. --- Information Revealing --- p.46 / Chapter 5. --- CONCLUSION --- p.47 / Chapter References --- p.48 / SOCIAL LEARNING AND THE WISDOM OF CROWD: SIMULTANEOUS MOVES IN NETWORK --- p.50 / Chapter 1. --- INTRODUCTION --- p.51 / Chapter 2. --- THE PARADIGM OF A NESTED WORLD --- p.52 / Chapter 2.1. --- Bounded Rationality and Social Learning --- p.53 / Chapter 2.2. --- Social Learning and Conformity tendency --- p.54 / Chapter 2.3. --- Summary - Judgment and Collective Behavior --- p.55 / Chapter 3. --- THEORETICAL FRAMEWORK --- p.56 / Chapter 3.1. --- Primary Investigation --- p.57 / Chapter 3.2. --- Secondary Investigation --- p.61 / Chapter 4. --- RESEARCH METHODOLOGY --- p.62 / Chapter 4.1. --- Construct Measures --- p.62 / Chapter 4.2. --- Computational Model --- p.64 / Chapter 4.3. --- Numerical Experiment --- p.67 / Chapter 4.4. --- Pattern Analysis --- p.68 / Chapter 5. --- CONCLUSION --- p.73 / Chapter 6. --- IMPLICATION --- p.74 / REFERENCES --- p.75 / LEARNING IN SOCIAL MEDIA: SOCIAL CUES AND DECISION BIASES --- p.78 / Chapter 1. --- INTRODUCTION --- p.79 / Chapter 2. --- RESEARCH BACKGROUNDS --- p.81 / Chapter 2.1. --- Social Cues and Choices --- p.81 / Chapter 2.2. --- Decision Biases of Social Cues --- p.82 / Chapter 3. --- HYPOTHESES --- p.83 / Chapter 3.1. --- Comparative Impact of Social Cues --- p.84 / Chapter 3.2. --- Reference Dependence in Social Learning --- p.85 / Chapter 3.3. --- WOM Driven by Leaders Confirmatory Bias and Followers Regret --- p.86 / Chapter 4. --- RESEARCH METHODOLOGY --- p.87 / Chapter 4.1. --- Data Summary --- p.88 / Chapter 4.2. --- Empirical Analysis --- p.89 / Chapter 5. --- DISCUSSION AND CONCLUDING REMARKS --- p.94 / REFERENCES --- p.95

Numerous studies have shown a discrepancy between how much an individual will accept to give up an object and how much an individual will pay to acquire the same good. This discrepancy is more commonly known as the endowment effect. Although scholars have generated a vast literature demonstrating the existence of the endowment effect, the underlying psychological mechanisms that account for this phenomenon remain a source of controversy. In the following dissertation, two different psychological processes are proposed to account for the WTP/WTA discrepancy: the use of a bargaining script and cognitive engagement through object interaction. Experiment 1 explores how the use of a bargaining schema affects buyers' and sellers' valuations of a mug. Experiment 2 examines the role object interaction plays in an individual's decisions about an object's value. Each of these studies presents new data that provide novel insights into the potential psychological processes that underlie the endowment effect. / text

The study compared delay discounting in adult humans using two different methods of adjustments. Both methods used hypothetical choices of monetary outcomes. One involved adjustments using a fixed sequence of ascending or descending amounts, the other used a bisection algorithm in which the changes in amounts varied as a function of the subjects' choices. Two magnitudes of delayed outcomes were used: $1,000 and $10,000. A within subject design was used to compare indifference curves and discounting measures across the two adjusting procedures. Twenty four subjects were divided in two groups and exposed to the procedures in opposite order, to account for sequence effects. Results from within subject comparisons showed no systematic differences between procedures.