Decision Making Under Uncertainty: The Relation between Economic Preferences and Psychological Personality Traits

Schröder, David; Freedman, Gail Gilboa

doi:10.2139/ssrn.3232835

Cited by 2 publications

(3 citation statements)

References 52 publications

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“…The seminal paper by Mani and colleagues [ 4 ] uses RPM to measure fluid intelligence, numerical Stroop task, and spatial compatibility task to measure the speed and accuracy of response. Several other economic studies also use RPM in Vietnam (middle income country) and the US and UK (high income countries) [ 20 , 32 , 33 ]. In contrast, working memory capacity (WMC) is a distinct construct frequently used in psychology to measure respondents’ ability to recall information in the face of distracting information [ 34 – 36 ].…”

Section: Introductionmentioning

confidence: 99%

“…A growing literature identifies the links between cognitive capacity to decision making under uncertainty. Several lab-based experimental studies use fluid intelligence, as a measure of cognitive ability, and assess its impact on economic preferences [ 32 , 37 , 38 ]. Besedeš and colleagues use a choice experiment to identify the interaction between respondents’ age and their use of choice heuristics when making a health insurance plan choice [ 39 ].…”

Section: Introductionmentioning

confidence: 99%

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The role of short-term changes in cognitive capacity on economic expenditure among Kenyan agro-pastoralists

Iles

Surve

Kagundu³

et al. 2021

PLoS ONE

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The increased exposure of pastoralist communities in East Africa to climatic shocks has focused attention on the resilience of these communities. Although many social scientists directly or indirectly infer versions of homo-economic agents, increasing evidence in development behavioral economics, indicates that such assumptions may be misplaced. Despite on-going advances in the science concerning the effects of stress on dynamic changes in short-term cognitive capacity, there remains limited understanding of the effects of changes in cognitive capacity on economic decision making. The present research empirically evaluates the drivers of short-term changes in cognitive capacity–cognitive ability and heuristic use–and its effect on crop and livestock expenditure among predominantly poor Kenyan agro-pastoralists. Three rounds of cognition and survey data from Samburu, Kenya is analysed. The primary data was collected at the end of the 2015–16 East African drought and covers an 11-month period between October 2016 and September 2017. Dynamic panel estimation, employing maximum likelihood, is used on balanced and unbalanced data. Results indicate that fluid intelligence and heuristic use, along with literacy and stressors, affect crop expenditure. Perceptions of scarcity, relative to prior expectations, are also identified as an important determinant of short-term changes in cognitive ability. These results underscore the importance of better understanding the effects of short-term changes in cognitive capacity on economic expenditure among the poor.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The role of short-term changes in cognitive capacity on economic expenditure among Kenyan agro-pastoralists

Iles

Surve

Kagundu³

et al. 2021

PLoS ONE

View full text Add to dashboard Cite

show abstract

“…Several earlier studies suggest that risk preferences may relate to most dimensions of the Big-Five personality traits and time preference correlates to conscientiousness and extraversion (Borghans et al, 2009;Daly et al, 2009). The correlation between personality traits and economic preferences in more recent studies has been found to be rather weak when it comes to explaining important life outcomes and behaviours (Becker et al, 2012;Rustichini et al, 2016;Schröder et al, 2020). Lönnqvist et al (2015) further find that risk preference obtained from standard choice tasks are less correlated to personality traits than the one obtained from selfassessment questionnaires.…”

Section: Neuroticismmentioning

confidence: 85%

Individual differences matter : personality traits and preferences in smallholders’ farm management

Qian

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multiple activities that might be spatially dispersed, and being able to sensibly adapt their resources (e.g., land, labour, and capital) to micro-variations in market circumstances and climate conditions (Nuthall, 2001;Rosenzweig, 1980). Operating a farm is thus in a way similar to owning a small business and farming requires entrepreneurial drive to some extent to meet challenges and deal with uncertainties (Allen & Lueck, 1998).The current thesis aims to provide more insights into the contribution of individual differences in personality traits and economic preferences to smallholders' economic decisions in agricultural production and farm management, using available data sets from China. It starts with an investigation Abstract: Land tenure security perceived by farmers is generally considered an important precondition for rural development. In this paper, we investigate the influence of psychological factors on farmers' perceived land tenure insecurity. In doing so, we disentangle the concept of perceived tenure insecurity into its cognitive and affective components and examine the relationship between them. We develop a recursive structural cognitive-affective model and present the results of applying structural equation modelling to a dataset collected in 2019 among 1359 rice farmers in three provinces in eastern China.We found that the cognitive component of perceived tenure insecurity shows an inverse "U-shape" relationship with the affective component, which can be interpreted as support for the ''risk-as-feeling'' proposition that feelings do not always correspond with perceived risk estimates in the case of land tenure security. Moreover, some personality traits (i.e., neuroticism and extraversion) were found to significantly affect farmers' perception of land tenure insecurity. We conclude that the perceived tenure security of rural residents may be increased if relevant laws and regulations would be communicated to farmers in such ways that personality heterogeneities are taken into account, paying special attention to farmers with more "vulnerable" traits. Although the research was done for rural China, the findings are also likely to be relevant for other developing countries where formal institution and informal regulations play intertwined roles in rural land tenure.

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Decision Making Under Uncertainty: The Relation between Economic Preferences and Psychological Personality Traits

Cited by 2 publications

References 52 publications

The role of short-term changes in cognitive capacity on economic expenditure among Kenyan agro-pastoralists

The role of short-term changes in cognitive capacity on economic expenditure among Kenyan agro-pastoralists

Individual differences matter : personality traits and preferences in smallholders’ farm management

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