In this note we shall discuss a concept that - despite its prominence in both Hume (1739) and Smith (1759), its obvious relevance for social behavior, and its not so infrequent use in colloquial language - has never gained a foothold in economic theory: the concept of empathy. Specifically, we...

Analysis of an original nationwide Internet survey reveals that health-related behavior shows associations with three aspects of time discounting: (i) impatience, measured by the overall discount rate; (ii) present bias, measured by the degree of declining impatience in the generalized hyperbolic...

Many important decisions are made without precise information about the probabilities of the outcomes. In such situations, individual ambiguity attitudes influence decision making. The present study identifies affective states as a transient cause of ambiguity attitudes. We conducted two...

A frequent feature of information structures is that they generate signals which are not mutually independent, but rather rely on a common set of underlying information. Using a simple experimental design, we show that in such contexts many people neglect correlations in the updating process,...

Scitovsky is known as a forerunner of behavioural economics simply because he drew heavily on psychology and claimed that people's choices may be "joyless" (Scitovsky, The joyless economy, 1976). However, a careful reformulation of his analysis shows that he anticipated a number of insights...

The impact that the retail format has on the level of individual motivation tends to be overlooked in discussions of the determinants of organic consumption, this neglect due to the tendency to model individual and contextual factors separately. Hence, the dominant research paradigm has...

We conduct a laboratory experiment that tests two fundamental predictions unique to salience theory. If an agent purchases one of two vertically differentiated products, salience theory makes the following two distinct predictions. First, it hypothesizes that a higher expected price level for...

A firm that accounts for consumer behavior sets the selling price of a product considering the reference price of consumers. In the literature, a reference price is usually modeled as depending on past selling prices. That is, past selling prices implicitly constrain the current selling price of...

This study analyzes the stability of preferences through the lens of psychological motives. We report the results of a public goods experiment in which subjects were induced with the motives of Care and Anger through autobiographical recall. Subjects' preferences, beliefs, and perceptions under...

Worldwide, people are gaining access to a formal bank account, which allows account-based instead of cash payments. Based on a novel randomized control trial, we document that the payment method is an important determinant of savings behavior. In rural India, we study the effect on savings of...