Levent Neyse

Overconfidence, Incentives and Digit Ratio

This paper contributes to a better understanding of the biological underpinnings of overconfidence by analyzing performance predictions in the Cognitive Reflection Test with and without monetary incentives. In line with the existing literature we find that the participants are too optimistic about their performance on average; incentives lead to higher performance; and males score higher than females on this particular task. The novelty of this paper is an analysis of the relation between participants’ performance prediction accuracy and their second to fourth digit ratio. It has been reported that the digit ratio is a negatively correlated bio-marker of prenatal testosterone exposure. In the un-incentivized treatment, we find that males with low digit ratios, on average, are significantly more overconfident about their performance. In the incentivized treatment, however, we observe that males with low digit ratios, on average, are less overconfident about their performance. These effects are not observed in females. We discuss how these findings fit into the literature on testosterone and decision making and how they might help to explain seemingly opposing evidence.

Heterogeneous Motives in the Trust Game: A Tale of Two Roles

Trustful and trustworthy behaviors have important externalities for the society. But what exactly drives people to behave in a trustful and trustworthy manner? Building on research suggesting that individuals’ social preferences might be a common factor informing both behaviors, we study the impact of a set of different motives on individuals’ choices in a dual-role Trust Game (TG). We employ data from a large-scale representative experiment (N = 774), where all subjects played both roles of a binary TG with real monetary incentives. Subjects’ social motives were inferred using their decisions in a Dictator Game and a dual-role Ultimatum Game. Next to self-interest and strategic motives we consider preferences for altruism, spitefulness, egalitarianism, and efficiency. We demonstrate that there exists considerable heterogeneity in motives in the TG. Most importantly, among individuals who choose to trust as trustors, social motives can differ dramatically as there is a non-negligible proportion of them who seem to act out of (strategic) self-interest whereas others are driven more by efficiency considerations. Subjects’ elicited trustworthiness, however, can be used to infer such motivations: while the former are not trustworthy as trustees, the latter are. We discuss that research on trust can benefit from adding the second player’s choice in TG designs.

An Image Based Automatic 2D:4D Digit Ratio Measurement Procedure for Smart City Health and Business Applications

2D:4D digit ratios are used for several health and business related applications. Currently, digit ratios are measured manually. This study proposes an automatic digit ratio measurement approach that can be used in the context of smart city healthcare and business applications. Smart city healthcare needs to be founded on the principles of self-service and independence. The proposed approach assumes that an image of the hands of a user is acquired using some imaging device. First, the hands are separated from the background. Next, the hand outline is traced. The hand outlines are used to identify points of interest that are used to measure the finger lengths and digit ratios. Experimental results are promising, but further research is needed before the approach can be deployed in real-world settings.

Gender Differences in Performance Predictions: Evidence from the Cognitive Reflection Test

This paper studies performance predictions in the 7-item Cognitive Reflection Test (CRT) and whether they differ by gender. After participants completed the CRT, they predicted their own (i), the other participants’ (ii), men’s (iii), and women’s (iv) number of correct answers. In keeping with existing literature, men scored higher on the CRT than women and both men and women were too optimistic about their own performance. When we compare gender-specific predictions, we observe that men think they perform significantly better than other men and do so significantly more than women. The equality between women’s predictions about their own performance and their female peers cannot be rejected. Our findings contribute to the growing literature on the underpinnings of behavior in economics and in psychology by uncovering gender differences in confidence about one’s ability relative to same and opposite sex peers.

It’s all about gains: Risk preferences in problem gambling.

Problem gambling is a serious socioeconomic problem involving high individual and social costs. In this article, we study risk preferences of problem gamblers including their risk attitudes in the gain and loss domains, their weighting of probabilities, and their degree of loss aversion. Our findings indicate that problem gamblers are systematically more risk taking and less sensitive toward changes in probabilities in the gain domain only. Neither their risk attitudes in the loss domain nor their degree of loss aversion are significantly different from the controls. Additional evidence for a similar degree of sensitivity toward negative outcomes is gained from skin conductance data—a psychophysiological marker for emotional arousal—in a threat-of-shock task.