@techreport{BartkeBosworthSnoweretal., type = {Working Paper}, author = {Bartke, Simon and Bosworth, Steven J. and Snower, Dennis and Chierchia, Gabriele}, title = {The Influence of Induced Care and Anger Motives on Behavior, Beliefs and Perceptions in a Public Goods Game}, pages = {35}, abstract = {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 each motive are compared with those of subjects experiencing a neutral autobiographical recall condition. We find that Care elicits significantly higher contributions than Anger, with Control treatment contributions in between. This is primarily driven by changes in conditional contribution schedules (measuring preferences) across treatments, though higher beliefs explain part of the effect that Care has on giving. These results are robust to checking for comprehension of the game's incentives. We also observe concomitant differences in attention to own and other's payoffs (using mouse tracking) as well as perceptions of the game's incentive structure (harmony) - particularly for subjects motivated by Anger. We interpret our findings as suggesting that people have access to multiple preferences that depend on how they perceive the decision context.}, language = {en} } @article{SnowerAhrensPirschel, author = {Snower, Dennis and Ahrens, Steffen and Pirschel, Inske}, title = {A Theory of Price Adjustment under Loss Aversion}, series = {Journal of Economic Behavior \& Organization}, volume = {134}, journal = {Journal of Economic Behavior \& Organization}, doi = {10.1016/j.jebo.2016.12.008}, pages = {78 -- 95}, abstract = {We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility gains from price decreases of equal magnitude. Price changes are evaluated relative to an endogenous reference price, which depends on the consumers' rational price expectations from the recent past. By implication, demand responses are more elastic for price increases than for price decreases and thus firms face a downward-sloping demand curve that is kinked at the consumers' reference price. Firms adjust their prices flexibly in response to variations in this demand curve, in the context of an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is starkly at variance with past theories. We find that - in line with the empirical evidence - prices are more sluggish upwards than downwards in response to temporary demand shocks, while they are more sluggish downwards than upwards in response to permanent demand shocks. The degree of these asymmetries, in turn, depends on the size of the shock.}, language = {en} } @techreport{SnowerBosworth, type = {Working Paper}, author = {Snower, Dennis and Bosworth, Steven J.}, title = {Identity-Driven Cooperation versus Competition}, pages = {8}, abstract = {This paper seeks to extend the domain of identity economics by exploring motivational foundations of in-group cooperation and out-group competition. On this basis, we explore the reflexive interaction between individual economic decisions and social identities in response to technological change in market economies. Our analysis explores how technological change falling on marketable goods and services, rather than non-market caring relationships, leads to a restructuring of identities, which increases the scope of individualism and promotes positional competition at the expense of caring activities. Since positional competition generates negative externalities while caring activities create positive ones, these developments have important welfare implications}, language = {en} } @article{SnowerAkerlof, author = {Snower, Dennis and Akerlof, George A.}, title = {Bread and Bullets}, series = {Elsevier Journal of Economic Behavior \& Organization}, volume = {126}, journal = {Elsevier Journal of Economic Behavior \& Organization}, number = {June 2016}, doi = {10.1016/j.jebo.2015.10.021}, pages = {58 -- 71}, abstract = {Standard economics omits the role of narratives (the stories that people tell themselves and others) when they make all kinds of decisions. Narratives play a role in understanding the environment; focusing attention; predicting events; motivating action; assigning social roles and identities; defining power relations; and establishing and conveying social norms. This paper describes the role narratives play in decision making, as it also juxtaposes this description against the backdrop of the Bolshevik-spawned narrative that played a critical role in the history of Russia and the Soviet Union in the 20th Century.}, language = {en} } @article{SnowerBosworthSinger, author = {Snower, Dennis and Bosworth, Steven J. and Singer, Tania}, title = {Cooperation, Motivation and Social Balance}, series = {Journal of Economic Behavior \& Organization}, volume = {126}, journal = {Journal of Economic Behavior \& Organization}, number = {June 2016}, doi = {10.1016/j.jebo.2015.12.005}, pages = {72 -- 94}, abstract = {This paper examines the reflexive interplay between individual decisions and social forces to analyze the evolution of cooperation in the presence of "multi-directedness," whereby people's preferences depend on their psychological motives. People have access to multiple, discrete motives. Different motives may be activated by different social settings. Inter-individual differences in dispositional types affect the responsiveness of people's motives to their social settings. The evolution of these dispositional types is driven by changes in the frequencies of social settings. In this context, economic policies can influence economic decisions not merely by modifying incentives operating through given preferences, but also by influencing people's motives (thereby changing their preferences) and by changing the distribution of dispositional types in the population (thereby changing their motivational responsiveness to social settings).}, language = {en} } @article{SnowerAhrens, author = {Snower, Dennis and Ahrens, Steffen}, title = {Envy, Guilt, and the Phillips Curve}, series = {Journal of Economic Behavior \& Organization}, volume = {99}, journal = {Journal of Economic Behavior \& Organization}, number = {C}, pages = {69 -- 84}, abstract = {We incorporate inequity aversion into an otherwise standard New Keynesian dynamic equilibrium model with Calvo wage contracts and positive inflation. Workers with relatively low incomes experience envy, whereas those with relatively high incomes experience guilt. The former seek to raise their income, and the latter seek to reduce it. The greater the inflation rate, the greater the degree of wage dispersion under Calvo wage contracts, and thus the greater the degree of envy and guilt experienced by the workers. Since the envy effect is stronger than the guilt effect, according to the available empirical evidence, a rise in the inflation rate leads workers to supply more labor over the contract period, generating a significant positive long-run relation between inflation and output (and employment), for low inflation rates. This Phillips curve relation, together with an inefficient zero-inflation steady state, provides a rationale for a positive long-run inflation rate. Given standard calibrations, optimal monetary policy is associated with a long-run inflation rate around 2 percent.}, language = {en} } @article{SnowerGraham, author = {Snower, Dennis and Graham, Liam}, title = {Hyperbolic Discounting and Positive Optimal Inflation}, series = {Macroeconomic Dynamics}, volume = {17}, journal = {Macroeconomic Dynamics}, number = {3}, doi = {10.1017/S1365100511000393}, pages = {591 -- 620}, abstract = {The Friedman rule states that steady-state welfare is maximized when there is deflation at the real rate of interest. Recent work by Khan, King, and Wolman [Review of Economic Studies 10 (4), 825-860] uses a richer model but still finds deflation optimal. In an otherwise standard New Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In our baseline calibration, the optimal rate of inflation is 2.1\% and remains positive across a wide range of calibrations.}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {A new societal contract}, series = {Economics: The Open-Access, Open-Assessment E-Journal}, volume = {2019-37}, journal = {Economics: The Open-Access, Open-Assessment E-Journal}, number = {13}, doi = {10.5018/economics-ejournal.ja.2019-37}, pages = {1 -- 13}, abstract = {This paper argues that the traditional social contract that underlies the free market economy has run its course and needs to be replaced by a new contract, based on a new conception of the "empowering economy." Whereas different social contracts are relevant to different societies, all these contracts have some features in common, addressing some basic human needs that are common to all. These are needs that every thriving society must satisfy. In the presence of current global problems - such as climate change and financial crises - satisfying these needs can also generate the popular approval for multilateral agreements to tackle these problems. The paper identifies three inconvenient truths for the existing social contract: (i) economic performance involves more than material prosperity, (ii) free markets naturally generate inequality, and (iii) human progress rests primarily on cooperation. In response, the paper proposes a new social contract that can be promoted through three policy approaches: (1) policy that focuses not just on material prosperity, but also on personal empowerment and social solidarity, (2) automatic stabilizers that reduce inequalities of economic power and (3) policy that develops the human capabilities of cooperation.}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {Toward Global Paradigm Change: Beyond the Crisis of the Liberal World Order}, series = {Economics: The Open-Access, Open-Assessment E-Journal}, volume = {13}, journal = {Economics: The Open-Access, Open-Assessment E-Journal}, number = {25}, doi = {10.5018/economics-ejournal.ja.2019-25}, pages = {19 -- 25}, abstract = {This paper may be summarized by the following points. First, the crisis of the liberal world order arises from a misalignment of our social, economic and political domains of activity, along with a resulting destabilization of our physical environment. The integration of the global economy has generated problems that extend beyond our current bounds of social and political cooperation. Second, extending our social cooperation - on which basis our political cooperation can be extended as well - requires the creation of the appropriate moral narratives. These narratives must guide business strategies, public policies and civic activities. Third, these narratives must be supplemented by multilevel governance structures that address challenges at the scale - micro, meso and macro - at which these challenges arise. Finally, past human experience in developing moral narratives, supported by multilevel governance structures, suggests guidelines for a future form of multilateralism that enables us to meet this challenge.}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {The G20 at a crossroads: the future of global governance}, series = {Economics: The Open-Access, Open-Assessment E-Journal}, volume = {12}, journal = {Economics: The Open-Access, Open-Assessment E-Journal}, number = {21}, pages = {1 -- 12}, language = {en} }