Johanna Mollerstrom

Social framing effects: Preferences or beliefs?

In an otherwise neutrally described Prisonersʼ dilemma experiment, we document that behavior is more likely to be cooperative when the game is called the Community Game than when it is called the Stock Market Game. However, the difference vanishes when only one of the subjects is in control of her action. The social framing effect also vanishes when the game is played sequentially. These findings are inconsistent with the hypothesis that the Community label triggers a desire to cooperate, but consistent with the hypothesis that social frames are coordination devices. More generally, our evidence indicates that social frames enter peopleʼs beliefs rather than their preferences.

Salivary testosterone change following monetary wins and losses predicts future financial risk-taking

While baseline testosterone has recently been implicated in risk-taking in men, less is known about the effects of changing levels of testosterone on financial risk. Here we attempt to influence testosterone in men by having them win or lose money in a chance-based competition against another male opponent. We employ two treatments where we vary the amount of money at stake so that we can directly compare winners to losers who earn the same amount, thereby abstracting from income effects. We find that men who experience a greater increase in bioactive testosterone take on more risk, an association that remains when controlling for whether the participant won the competition. In fact, whether subjects won the competition did not predict future risk. These results suggest that testosterone change, and thus individual differences in testosterone reactivity, rather than the act of winning or losing, influence financial risk-taking.

Cognitive ability and the demand for redistribution.

Empirical research suggests that the cognitively able are politically more influential than the less able, by being more likely to vote and to assume leadership positions. This study asks whether this pattern matters for public policy by investigating what role a persons cognitive ability plays in determining his preferences for redistribution of income among citizens in society. To answer this question, we use a unique Swedish data set that matches responses to a tailor-made questionnaire to administrative tax records and to military enlistment records for men, with the latter containing a measure of cognitive ability. On a scale of 0 to 100 percent redistribution, a one-standard-deviation increase in cognitive ability reduces the willingness to redistribute by 5 percentage points, or by the same amount as a

Capital Flows, Consumption Booms and Asset Bubbles: A Behavioural Alternative to the Savings Glut Hypothesis

35,000 increase in mean annual income. We find support for two channels mediating this economically strong and statistically significant relation. First, higher ability is associated with higher income. Second, ability is positively correlated with the view that economic success is the result of effort, rather than luck. Both these factors are, in turn, related to lower demand for redistribution.