Social and Behavioral Approaches to Global Problems
In the course of past century, humanity has confronted a multitude of seemingly intractable global problems. These include economic problems such as financial crises, employment insecurity and persistent pockets of poverty; social problems such as demographic challenges and social fragmentation; environmental problems such as climate change, biodiversity loss, freshwater scarcity; and political problems such as international crime, weapons proliferation, and corruption. We have the technical capacity to solve many of these problems, but we have nevertheless made little progress in addressing them.
Market failure is the explanation that mainstream economics offers for the persistence of many global problems. On this basis, economists commonly advocate policies that offer individuals full compensation for the benefits and costs they generate – through taxes and subsidies, redefinitions of property rights, and various laws and regulations. The Invisible Hand, along with the associated explanation for market failures, presupposes that people
(i) are individualistic, self-sufficient, self-interested, and materialistic (in the sense that their utilities depend primarily on goods and services),
(ii) have internally consistent, stable, far-sighted preferences
(iii) are means-end rational, in the sense of using their available means to achieve their given, preference-determined ends, and
(iv) maximize their utility, which describes both their decision-making and their well-being.
The claim underlying this research area is that this conception of human motivation and decision-making is outdated and inconsistent with current evidence from other disciplines, such as neuroscience, cognitive science, cognitive psychology, developmental psychology, behavioral economics and more. For example, people are not exclusively self-interested, since they have capacities for fairness, empathy, compassion, and care; they are not exclusively rational, because most of their behavior is substantially motivated by emotions and heuristics; they are not exclusively individualistic, since their preferences are significantly determined by the social groups to which they belong; their decisions are not responses to propositional knowledge under conditions of risk, since their decision-making is a reflexive process (both cognitive and causative) made under uncertainty.
This research area analyzes the impact of social interaction and behavioral responses of the single agents on the emergence of global economic problems and the design of possible solutions in view of these results. Special attention is given to lack of global cooperation and excessive risk taking as two major sources of global problems. The research area takes the view that understanding human behavior in this context requires to know
(i) how the brain works and, more specifically, how motivational systems and bodily reactions shape our decisions, and
(ii) the impact of social interaction as people are usually not exclusively self-interested but also strive for fairness and equality. Therefore our analysis takes into account recent insights from related disciplines as neuroscience, psychology, cognitive science, and behavioral economics and explores their consequences for addressing global problems.
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- Morone, A., Nuzzo, S. (2016). Asset Markets in the Lab: A Literature Review. Kiel Working Paper, 2060, Kiel Institute for the World Economy, Kiel, 30 pp.
- Neyse, L., Bosworth, S., Ring, P., Schmidt, U. (2016). Overconfidence, Incentives and Digit Ratio. Scientific Reports 6, Article number: 23294
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- Snower, D., Bosworth, S. (2016). Identity-driven Cooperation versus Competition. American Economic Review: Papers and Proceedings, 106(5), 420-424.
- Snower, D. (2016). Thriving Through Balance. Journal of Economic Behavior & Organization, 126 (Part B), 1-4.
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- Birnbaum, M., Schmidt, U. (2015). The Impact of Learning by Thought on Violations of Independence and Coalescing. Decision Analysis, 12 (3), 144-152.
- Braun, S., Schmidt, U. (2015). The Gambler's Fallacy in Penalty Shootouts. Current Biology, 25(14), R597-R598.
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- Khadjavi, M. (2015). On the Interaction of Deterrence and Emotions. Journal of Law, Economics, and Organization, 31(2), 287-319.
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- Ring, P., Kaernbach, C. (2015). Sensitivity towards Fear of Electric Shock in Passive Threat Situations. PLoS ONE, 10(3), e0120989.
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- Schmidt, U., Neyse, L., Aleknonyte, M. (2015). Income Inequality and Risk Taking. Kiel Working Paper, 2000, Kiel Institute for the World Economy, Kiel, 22 pp.
- Ahrens, S., Snower, D. (2014). Envy, Guilt, and the Phillips Curve. Journal of Economic Behavior & Organization, 99, Elsevier, 69-84.
- Bergh, A., Wichardt, P. (2014). Accounting for Context: Separating Monetary and Social Incentives. Kiel Working Paper, 1971, Kiel Institute for the World Economy, Kiel, 9 pp.
- Cox, J., Sadiraj, V., Schmidt, U. (2014). Alternative Payoff Mechanisms for Choice under Risk. International Advances in Economic Research , 20 (2), 239-240.
- Cox, J., Sadiraj, V., Schmidt, U. (2014). Asymmetrically Dominated Choice Problems, the Isolation Hypothesis and Random Incentive Mechanisms. PLOS ONE, 9(3), e90742.
- Friedl, A., Lima de Miranda, K., Schmidt, U. (2014). Insurance Demand and Social Comparison: An Experimental Analysis. Journal of Risk and Uncertainty, 48(2), 97-109.
- Friedl, A., Neyse, L., Schmidt, U. (2014). Payment Scheme Changes and Effort Provision: The Effect of Digit Ratio. MPRA, Munich, 17 pp.
- Neyse, L., Brañas-Garza, P. (2014). Digit Ratio Measurement Guide. Kiel Working Paper, 1914, Institute for the World Economy, Kiel, 12 pp.
- Schmidt, U., Trautmann, S. (2014). Common Consequence Effects with Pricing Data . Theory and Decision , 76, 1-7.
- Schmidt, U., Seidl, C. (2014). Reconsidering the common ratio effect: The roles of compound independence, reduction, and coalescing. Theory and Decision, 77(3), 323-339.
- Brañas-Garza, P., Kovarik, J., Neyse, L. (2013). Second-to-fourth digit ratio has a non-monotonic impact on altruism. PLoS ONE
- Gerber, A., Neitzel, J., Wichardt, P. (2013). Minimum Participation Rules for the Provision of Public Goods. European Economic Review, 64, 209-222.
- Graham, L., Snower, D. (2013). Hyperbolic Discounting and Positive Optimal Inflation. Macroeconomic Dynamics, 17, 591–620.
- Khadjavi, M., Lange, A. (2013). Prisoners and their dilemma. Journal of Economic Behavior & Organization, 92, 163-175.
- Lönnqvist, J., Verkasalo, M., Walkowitz, G., Wichardt, P. (2013). Personal Values and Pro-Social Behaviour in Strategic Interactions: Distinguishing Value-Expressive from Value-Ambivalent Behaviours. European Journal of Psychology, 43 (6), 554-569.
- Menkhoff, L., Schmeling, M., Schmidt, U. (2013). Overconfidence, Experience, and Professionalism: An Experimental Study. Journal of Economic Behavior & Organization, 86, 92-101.
- Schmidt, U., Zank, H. (2013). Chance Theory: A Separation of Riskless and Risky Utility. Kiel Working Papers, 1874, Kiel Institute for the World Economy, Kiel, 40 pp.
- Lönnqvist, J., Walkowitz, G., Verkasalo, M., Wichardt, P. (2012). Personality Disorder Categories as Combinations of Dimensions: Translating Cooperative Behaviour in Borderline Personality Disorder Into the Five-Factor Framework. Journal of Personality Disorders, 26, 298-304.
- Wichardt, P. (2012). Existence of Valuation Equilibria When Equilibrium Strategies Cannot Differentiate Between Equal Ties. Games and Economic Behavior, 74, 709-713.
- Buchan, N., Brewer, M., Grimalda, G., Wilson, R., Fatas, E., Foddy, M. (2011). Global Social Identity and Global Cooperation. Psychological Science, 22(6), 821-828.
- Buchan, N., Grimalda, G. (2011). Reducing Social Distance: The Role of Globalization in Global Public Goods Provision. Shane, R., Thye, Edward J. Lawler (eds), Advances in Group Processes. Emerald Group Publishing ltd.
- Wichardt, P. (2011). Identity, Utility and Cooperative Behaviour - An Evolutionary Perspective. Scandinavian Journal of Economics, 113(2), 418-443.
- Gerber, A., Wichardt, P. (2010). Iterated Reasoning and Welfare-Enhancing Instruments in the Centipede Game. Journal of Economic Behavior and Organization, 74(1-2), 123-136.
- Wichardt, P. (2010). Modelling Equilibrium Play As Governed by Analogy and Limited Foresight. Games and Economic Behavior, 70(2), 472-487.
- Buchan, N., Grimalda, G., Wilson, R., Brewer, M., Fatas, E., Foddy, M. (2009). Globalization and Human Cooperation. Proceedings of the National Academy of Sciences of the USA, 106 (11), 4138-4142.
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