Do other-regarding preferences change with age? Evidence from a gift exchange experiment

A series of laboratory experiments investigate potential differences in other-regarding behavior by age of participant. Specifically, a gift exchange experiment is conducted with eighth graders, high school seniors, undergraduates, and working adults, all with similar observable demographic characteristics. All groups exhibit significant levels of gift exchange. Eighth graders exhibit significantly less gift exchange than other groups whereas the responses of other groups do not appear to differ. The findings indicate that other-regarding behavior is present, but still developing in adolescents and undergraduate subjects in gift exchange experiments exhibit similar behavior to adults with similar observable characteristics.     

Extreme quantiles and tail index of a distribution based on kernel estimator

In this paper, we reveal the relationship between the tail exponent introduced by Parzen (1979) and tail index for a distribution function. Furthermore, we analyze the domain of attraction of the weighted sum of the distributions and its tail index. We show that the extreme quantiles can estimate directly, through knowing only the tail index of the kernel distribution function used in estimating the distribution function. Moreover, we give a smoothing parameter of extreme quantiles, which does not depend on any distribution function. The simulations and the application to reals data show that the proposed smoothed parameter gives better results for a heavy-tailed distribution, and for small sizes sample in extremes level.     

Cognitive dissonance, pessimism, and behavioral spillover effects

A two-stage experiment was designed to examine spillover effects of a type of optimism/pessimism. We first exploit cognitive dissonance to induce optimism/pessimism by random assignment of high/low piece rates for performing a task. Subjects receiving the low piece rate are significantly more pessimistic with respect to performance. In Stage 2 individuals participate in an ultimatum game. Pessimistic subjects have significantly lower minimum acceptable offers, though pessimism was randomly generated in an unrelated environment. These results reveal behaviorally and economically important spillover effects - for example, pessimism regarding one’s initial conditions (e.g., living in poverty) may have spillover effects on one’s future labor market outcomes.     

Non‐parametric interval estimation for the partial area under the ROC curve

Accurate diagnosis of disease is a critical part of health care. New diagnostic and screening tests must be evaluated based on their abilities to discriminate diseased conditions from non‐diseased conditions. For a continuous‐scale diagnostic test, a popular summary index of the receiver operating characteristic (ROC) curve is the area under the curve (AUC). However, when our focus is on a certain region of false positive rates, we often use the partial AUC instead. In this paper we have derived the asymptotic normal distribution for the non‐parametric estimator of the partial AUC with an explicit variance formula. The empirical likelihood (EL) ratio for the partial AUC is defined and it is shown that its limiting distribution is a scaled chi‐square distribution. Hybrid bootstrap and EL confidence intervals for the partial AUC are proposed by using the newly developed EL theory. We also conduct extensive simulation studies to compare the relative performance of the proposed intervals and existing intervals for the partial AUC. A real example is used to illustrate the application of the recommended intervals. The Canadian Journal of Statistics 39: 17–33; 2011 © 2011 Statistical Society of Canada     

Goal orientation and variety seeking behavior: The role of decision task

This research conducted two experiments to examine the interaction effect of decision task (sequential choices vs. simultaneous choices) and goal orientation (prevention focus vs. promotion focus) on variety-seeking behavior. In the sequential choices for sequential consumption condition (consumers buy one item at a time for each consumption occasion), promotion-focused consumers tend to select a greater variety of items (a higher extent of variety-seeking) than prevention-focused consumers. In contrast, in the simultaneous choices for sequential consumption condition (consumers buy several items at a time for each following consumption occasion), prevention-focused consumers tend to select a greater variety of items (a higher extent of variety-seeking) than promotion-focused consumers.     

EXPONENTIAL‐GROWTH BIAS AND LIFECYCLE CONSUMPTION

Exponential‐growth bias (EGB) is the tendency for individuals to partially neglect compounding of exponential growth. We develop a model wherein biased agents misperceive the intertemporal budget constraint, and derive conditions for overconsumption and dynamic inconsistency. We construct an incentivized measure of EGB in a US‐representative population and find substantial bias, with approximately one third of subjects estimated as the fully biased type. The magnitude of the bias is negatively associated with asset accumulation, and does not respond to a simple graphical intervention.     

PREDICTING LOTTO NUMBERS: A NATURAL EXPERIMENT ON THE GAMBLER'S FALLACY AND THE HOT‐HAND FALLACY

We investigate the “law of small numbers” using a data set on lotto gambling that allows us to measure players' reactions to draws. While most players pick the same set of numbers week after week, we find that those who do change, react on average as predicted by the law of small numbers as formalized in recent behavioral theory. In particular, players tend to bet less on numbers that have been drawn in the preceding week, as suggested by the “gambler's fallacy”, and bet more on a number if it was frequently drawn in the recent past, consistent with the “hot‐hand fallacy”.