Two pension reforms in Austria increased the early retirement age (ERA) from 60 to 62 for men and from 55 to 58.25 for women. We find that raising the ERA increased employment by 9.75 percentage points among affected men and by 11 percentage points among affected women. The reforms had large spillover effects on the unemployment insurance program but negligible effects on disability insurance claims. Specifically, unemployment increased by 12.5 percentage points among men and by 11.8 percentage points among women. The employment response was largest among high-‐‑wage and healthy workers, while low-‐‑wage and less healthy workers either continued to retire early via disability benefits or bridged the gap to the ERA via unemployment benefits. Taking spillover effects and additional tax revenues into account, we find that for a typical birthyear cohort a one year increase in the ERA resulted in a reduction of net government expenditures of 107 million euros for men and of 122 million euros for women.
Global games with endogenous information often exhibit multiple equilibria. In this paper we show how one can nevertheless identify useful predictions that are robust across all equilibria and that could not have been delivered in the common-knowledge counterparts of these games. Our analysis is conducted within a flexible family of games of regime change, which have been used to model, inter alia, speculative currency attacks, debt crises, and political change. The endogeneity of information originates in the signaling role of policy choices. A novel procedure
of iterated elimination of non-equilibrium strategies is used to deliver probabilistic predictions that an outside observer—an econometrician—can form under arbitrary equilibrium selections. The sharpness of these predictions improves as the noise gets smaller, but disappears in the
complete-information version of the model.
Deficits in impulse control are discussed as key mechanisms for major worldwide health problems such as drug addiction and obesity. For example, obese subjects have difficulty controlling their impulses to overeat when faced with food items. Here, we investigated the role of neural impulse control mechanisms for dietary success in middle-aged obese subjects. Specifically, we used a food-specific delayed gratification paradigm and functional magnetic resonance imaging to measure eating-related impulse-control in middle-aged obese subjects just before they underwent a twelve-week low calorie diet. As expected, we found that subjects with higher behavioral impulse control subsequently lost more weight. Furthermore, brain activity before the diet in VMPFC and DLPFC correlates with subsequent weight loss. Additionally, a connectivity analysis revealed that stronger functional connectivity between these regions is associated with better dietary success and impulse control. Thus, the degree to which subjects can control their eating impulses might depend on the interplay between control regions (DLPFC) and regions signaling the reward of food (VMPFC). This could potentially constitute a general mechanism that also extends to other disorders such as drug addiction or alcohol abuse.
Individual political preferences as expressed, for instance, in votes or donations are fundamental to democratic societies. However, the relevance of deliberative processing for political preferences has been highly debated, putting automatic processes in the focus of attention. Based on this notion, the present study tested whether brain responses reflect participants' preferences for politicians and their associated political parties in the absence of explicit deliberation and attention. Participants were instructed to perform a demanding visual fixation task while their brain responses were measured using fMRI. Occasionally, task-irrelevant images of German politicians from two major competing parties were presented in the background while the distraction task was continued. Subsequent to scanning, participants' political preferences for these politicians and their affiliated parties were obtained. Brain responses in distinct brain areas predicted automatic political preferences at the different levels of abstraction: activation in the ventral striatum was positively correlated with preference ranks for unattended politicians, whereas participants' preferences for the affiliated political parties were reflected in activity in the insula and the cingulate cortex. Using an additional donation task, we showed that the automatic preference-related processing in the brain extended to real-world behavior that involved actual financial loss to participants. Together, these findings indicate that brain responses triggered by unattended and task-irrelevant political images reflect individual political preferences at different levels of abstraction.
Optimal decision-making often requires exercising self-control. A growing fMRI literature has implicated the dorsolateral prefrontal cortex (dlPFC) in successful self-control, but due to the limitations inherent in BOLD measures of brain activity, the neurocomputational role of this region has not been resolved. Here we exploit the high temporal resolution and whole-brain coverage of event-related potentials (ERPs) to test the hypothesis that dlPFC affects dietary self-control through two different mechanisms: attentional filtering and value modulation. Whereas attentional filtering of sensory input should occur early in the decision process, value modulation should occur later on, after the computation of stimulus values begins. Hungry human subjects were asked to make food choices while we measured neural activity using ERP in a natural condition, in which they responded freely and did not exhibit a tendency to regulate their diet, and in a self-control condition, in which they were given a financial incentive to lose weight. We then measured various neural markers associated with the attentional filtering and value modulation mechanisms across the decision period to test for changes in neural activity during the exercise of self-control. Consistent with the hypothesis, we found evidence for top-down attentional filtering early on in the decision period (150-200 ms poststimulus onset) as well as evidence for value modulation later in the process (450-650 ms poststimulus onset). We also found evidence that dlPFC plays a role in the deployment of both mechanisms.
This Research Topic covers issues in psychology, behavioral economics, and cognitive neuroscience investigating the neural structures and mechanisms underlying approach, and avoidance behavior in the face of rewards and punishments. The objective is to understand the nature of critical differences and asymmetries between the ways that appetitive and aversive outcomes are processed by the brain. A number of topics are covered, such as the development of economic models integrating costs and benefits into a single value, neuroimaging approaches of appetitive and aversive conditioning, reward-punishment interactions, pain and defensive behavior, the role of dopamine neurons in aversive conditioning, and the interactions between serotonin and dopamine in punishment, pain, and aversion. The neural bases of reward-punishment interactions are of great interest to a broad readership because of the fundamental role of dopamine and serotonin in a number of motivational and decision processes, and because of their theoretical and clinical implications for understanding dysfunctions of these two systems. Findings in this research field are also important to basic neuroscientists interested in the computational processes of pain and aversive learning and cognitive psychologists working on conditioning/reinforcement. Punishment-based decision making and reward processing cover a wide range of topics and levels of analysis, from basic neural mechanisms and computational models of appetitive and aversive conditioning, to the system neuroscience level. The contributions to this Frontiers Research Topic in Decision Neuroscience are forward-looking assessments of the current and future issues faced by researchers.
This paper studies the stability of socially responsible behavior in markets. We develop a laboratory product market in which low-cost production creates a negative externality for third parties, but where alternative production with higher costs entirely mitigates the externality. Our data reveal a robust and persistent preference for avoiding negative social impact in the market, reflected both in the composition of product types and in a price premium for socially responsible products. Socially responsible behavior in the market is generally robust to varying market characteristics, such as increased seller competition and limited consumer information. Fair behavior in the market is slightly lower than that measured in comparable individual decisions.
The process of economic reforms launched in 1978, and gradually extended until current days, has catapulted China into a stellar growth trajectory that has proven highly resilient. In this paper, we estimate the effect on economic development of China’s industrial policy, in particular, the establishment of Special Economic Zones (SEZ), a salient economic reform. We use data from a panel of 276 Chinese cities and prefectures from 1988 to 2010. Our difference-in-difference estimator exploits the variation in the establishment of SEZ across time and space. We find that the establishment of a state-level SEZ is associated with an increase in the level of GDP of about 20%, but not with a permanently steeper growth path. This finding is confirmed with alternative specifications and in a sub-sample of inland provinces, where the selection of cities to host the zones was based on administrative criteria. Decomposing the effect of SEZ on GDP into different channels shows that this worked mainly through the accumulation of physical capital, although there is some evidence of increasing productivity and human capital investments. Using light intensity as an alternative measure for economic activity confirms the positive effects of SEZ.
This paper analysis the global distribution of art collections and collectors´ biases with respect to the origin of artworks. Employing a unique dataset we find that the greatest number of private art collections are located in Europe, North America and Asia. There are relatively few collections in Latin America and Africa. The artists whose oeuvres dominate the markets for collected art come from North America, followed by Asian and European artists. The home bias in private art collections turns out to be strong in all continents and countries. It is highest for Asian and African collections and smaller for European and North American collections. The home bias can partly be accounted for by high export and import restrictions.
Social comparison processes have potentially far reaching consequences for many economic domains. We conducted a randomized field experiment to examine how social comparison affects workers’ effort provision if their own wage or the wage of a co‐worker is cut. Workers were assigned to groups of two, performed identical individual tasks, and received the same performanceindependent hourly wage. Cutting both group members’ wages caused a decrease in performance. But when only one group member’s wage was cut, the affected workers decreased their performance more than twice as much as when both workers’ wages were cut. This finding indicates that social comparison processes among workers affect effort provision because the only difference between the two wage‐cut treatments is the other group member’s wage level. In contrast, workers whose wage was not cut but who witnessed their group member’s pay being cut displayed no change in performance relative to the baseline treatment in which both workers’ wages remained unchanged. This indicates that social comparison exerts asymmetric effects on effort.
