TY - RPRT A1 - Bartke, Simon A1 - Bosworth, Steven J. A1 - Snower, Dennis A1 - Chierchia, Gabriele T1 - The Influence of Induced Care and Anger Motives on Behavior, Beliefs and Perceptions in a Public Goods Game N2 - 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. KW - Public goods, motivation, stability of preferences, anger, care, framing Y1 - 2016 UR - https://www.ifw-kiel.de/fileadmin/Dateiverwaltung/IfW-Publications/Simon_Bartke/the-influence-of-induced-care-and-anger-motives-on-behavior-beliefs-and-perseptions-in-a-public-goods-game/kwp-2054.pdf ER - TY - JOUR A1 - Snower, Dennis A1 - Ahrens, Steffen A1 - Pirschel, Inske T1 - A Theory of Price Adjustment under Loss Aversion JF - Journal of Economic Behavior & Organization N2 - 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. KW - Price sluggishness Loss aversion State-dependent pricing Y1 - 2017 U6 - https://doi.org/10.1016/j.jebo.2016.12.008 VL - 134 SP - 78 EP - 95 ER - TY - RPRT A1 - Snower, Dennis A1 - Bosworth, Steven J. T1 - Identity-Driven Cooperation versus Competition N2 - 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 KW - motivation reflexivity cooperation identity technological progress bowling alone Y1 - 2016 UR - https://www.econstor.eu/handle/10419/130402 ER - TY - JOUR A1 - Snower, Dennis A1 - Akerlof, George A. T1 - Bread and Bullets JF - Elsevier Journal of Economic Behavior & Organization N2 - 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. KW - Narrative Motivation Attention Prediction Identity Social assignment Y1 - 2016 U6 - https://doi.org/10.1016/j.jebo.2015.10.021 VL - 126 IS - June 2016 SP - 58 EP - 71 ER - TY - JOUR A1 - Snower, Dennis A1 - Bosworth, Steven J. A1 - Singer, Tania T1 - Cooperation, Motivation and Social Balance JF - Journal of Economic Behavior & Organization N2 - 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). KW - Motivation Reflexivity Cooperation Social dilemma Endogenous preferences Dispositions Y1 - 2016 U6 - https://doi.org/10.1016/j.jebo.2015.12.005 VL - 126 IS - June 2016 SP - 72 EP - 94 ER - TY - JOUR A1 - Snower, Dennis A1 - Ahrens, Steffen T1 - Envy, Guilt, and the Phillips Curve JF - Journal of Economic Behavior & Organization N2 - 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. KW - inflation; long-run Phillips curve; fairness; inequity aversion Y1 - 2014 UR - https://econpapers.repec.org/RePEc:zbw:cauewp:201201 VL - 99 IS - C SP - 69 EP - 84 ER - TY - JOUR A1 - Snower, Dennis A1 - Graham, Liam T1 - Hyperbolic Discounting and Positive Optimal Inflation JF - Macroeconomic Dynamics N2 - 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. KW - Optimal Monetary Policy, Inflation Targeting, Phillips Curve, Nominal Inertia, Monetary Policy Y1 - 2013 U6 - https://doi.org/10.1017/S1365100511000393 VL - 17 IS - 3 SP - 591 EP - 620 ER - TY - JOUR A1 - Snower, Dennis T1 - A new societal contract JF - Economics: The Open-Access, Open-Assessment E-Journal N2 - 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. Y1 - 2019 U6 - https://doi.org/10.5018/economics-ejournal.ja.2019-37 VL - 2019-37 IS - 13 SP - 1 EP - 13 ER - TY - JOUR A1 - Snower, Dennis T1 - Toward Global Paradigm Change: Beyond the Crisis of the Liberal World Order JF - Economics: The Open-Access, Open-Assessment E-Journal N2 - 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. KW - Economy; polity; society; environment; liberal world order; social coopera-tion; multilevel governance; narratives Y1 - 2019 U6 - https://doi.org/10.5018/economics-ejournal.ja.2019-25 VL - 13 IS - 25 SP - 19 EP - 25 ER - TY - JOUR A1 - Snower, Dennis T1 - The G20 at a crossroads: the future of global governance JF - Economics: The Open-Access, Open-Assessment E-Journal KW - G20; governance; international cooperation; empowerment and solidarity Y1 - 2018 UR - http://www.economics-ejournal.org/economics/journalarticles/2018-22 VL - 12 IS - 21 SP - 1 EP - 12 ER -