Übung Flashcards
1
Q
What are the results of Van Dalen et al. (2017): The negative impact of uncertainty in economic news on consumer confidence?
A
- Uncertainty in the news makes individuals pessimistic
- Prospective consumer confidence is inversely related to uncertainty in economic news
- Consumer confidence reflects lagged levels of uncertainty
• If journalists include on average 1 term indicating uncertainty per news article, consumer confidence will drop by one-third of a point in the month after - Finding seems to be robust as it is
• Independent of the visibility of economic news
• Independent of unemployment rate, price index, and production index
• Independent of the negativity of the news
2
Q
What are advantages of economic games?
A
- Participants make real decisions with monetary consequences, both to themselves and others (generates observations of real behaviour)
- Outcomes can be unambiguously defined (payoff matrix)
- Standard structure makes different experimental studies easy to compare
- Can be carefully designed with both precision and control to include a well-specified set of incentives and other exogenous variables to model people’s behaviour
3
Q
What are the results of Engel (2011): Dictator games: A meta study?
A
- Decision making is complex and influenced by various factors
• Simple games like dictator and ultimatum game can help to explore human behaviour, because situation can be tightly controlled - “Decision anomalies” are not always “irrational”
• Every day, people donate blood, volunteer time and effort for worthy causes
4
Q
What is the definition of Messenger?
A
- Messenger points out that the source of information is sometimes more important than the information itself
- Perceived expertise of the communicator, similarity and sympathy influence the interpretation of information
- Example: Famous people on advertisements
5
Q
What is the definition of Incentive?
A
- Prospect theory
• Losses loom larger than gains
• The reference point matters and whether outcomes are evaluated as loss or gain - Small probabilities are given stronger weight
- Money is allocated to different account
- Future losses and gains are discounted
- People often tend to live for today at the expanse of tomorrow
6
Q
What is the definition of Norms?
A
- Norms refers to the fact that social and cultural norms guide behaviour through expectations and rules
- Social norms often act as automatic guidance of individual behaviour
- Example: Goldstein, Cialdini, & Griskevicius, 2008): Using Social Norms to Motivate Environmental Conservation in Hotels
• Research design: Two signs (environmental vs social norm message) soliciting participation in the towel reuse program were created and tested
• The descriptive norm message yielded a significantly higher towel reuse rate (44.1%) than the standard environmental message (35.1%)
7
Q
What is the definition of Defaults?
A
- Defaults refer to findings that pre-selected are often perceived as advice or as the norm
• In classical economics, defaults should have a limited effect: when defaults are not consistent with preferences, people would choose an appropriate alternative - Example: Organ donation
• Opt-in countries (default: nobody is an organ donor) have significantly lower consent rates than opt out countries (default: everyone is an organ donor)
-> Making a decision often involves effort, whereas accepting the default is effortless, while defaults can also imply a recommended action (or social norm)
8
Q
What is the definition of Salience?
A
- Salience highlights that much of the information encountered is filtered out, and only a few messages which attract people’s attention are registered
- Simplicity and immediate understanding of what should be done are important
9
Q
What is the definition of Priming?
A
- Priming refers to finding that certain words, labels, pictures, and smells serve as a cue that influences the focus and interpretation of information and situations
- These cues consequently shape behaviour
10
Q
What is the definition of Commitments?
A
- Commitments refer to the fact that willpower is often weak
- Knowing that smoking causes health problems, that overeating, and overspending should be avoided is often not enough to change behaviour
- Commitments can help us to do what is considered the better behaviour
- Especially costly commitments, such as public promises, contracts involving financial costs in case of breaking a commitment, etc.
11
Q
What is the definition of Ego?
A
- Ego highlights that people tend to invest in impression management and in a positive self-image
- Why?
• Pro-social individuals are seen as more trustworthy and they are more desirable as friends, allies, and romantic partners
• Pro-social behaviour is associated with status and prestige (e.g., donations made by huge companies or celebrities)
• People might engage in costly prosocial behaviours (such as environmental conservation) when they are motivated to attain status - Research question: Why do people purchase pro-environmental “green” products?
• Activating status motives led people to choose prosocial green products over more luxurious, equally priced non-green products
• Status motives increased desire for less luxurious green products when shopping in public, but not in private
• Status motives increased desirability of green products especially when such products cost more – but not less – relative to non-green products (ability to signal wealth)
12
Q
What are relevant concepts of financial literacy and what is their importance?
A
- Compound interest
• Appreciate the importance of starting to save early
• Knowing the dangers of borrowing at very high interest rates - Inflation
• Understand how to incorporate inflation into saving and borrowing decisions
• Consider inflation when planning for retirement - Risk diversification
• Choosing diversified portfolios to protect retirement assets - Tax treatment of retirement saving vehicles
• Knowing about tax advantages increases likelihood of choosing a good option - Employer matches of defined contribution saving plans
• Knowing about the contribution employers provide allows receiving higher returns
13
Q
What are potential reasons for varying Financial literacy?
A
- Educational differences
• Might be driven by cognitive abilities - Gender differences
• Traditional roles that affect the division of labour might lead women to build less financial knowledge
• Self-confidence might vary between genders and thus affect Financial Literacy
• Even for highly educated people, women show less Financial Literacy - International differences
• Might refer to different educational systems - But results are very heterogenous, more research is needed
14
Q
What is the Effectiveness of Financial Literacy?
A
- Individual (as opposed to mass) and goal-specific (as opposed to broad) programmes better at improving financial literacy and resulting behaviour
- Interventions should be “just-in-time” for financial decisions to be made
- Interventions might not help to increase financial knowledge at all
- Other variables (such as money planning in the long term and planning and pursuing a goal) might be more relevant to financial behaviour than pure knowledge and should be considered in studies focusing on financial literacy
15
Q
What is self-congruence?
A
- Do actual and ideal self-congruence lead to compulsive buying? Which one of the two has a greater contribution in predicting compulsive buying?
- Buying behaviour can be in line with one’s ideal or one’s actual self
- Ideal self
• The state of individual’s aspirations of their ideas and goals in the future - Actual self
• The state where individuals consider who they really are
