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Cognitive Dissonance, Pessimism, and Behavioral Spillover Effects

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  • David L. Dickinson
  • Robert J. Oxoby

Abstract

This paper reports results from a unique two-stage experiment designed to examine the spillover effects of optimism and pessimism. In stage 1, we induce optimism or pessimism onto subjects by randomly assigning a high or low piece rate for performing a cognitive task. We find that participants receiving the low piece rate are significantly more pessimistic with respect to performance on this task. In stage 2 individuals participate in an ultimatum game. We find that minimum acceptable offers are significantly lower for pessimistic subjects, though this pessimism was generated in a completely unrelated environment. These results highlight the existence of important spillover effects that can be behaviorally and economically important - for example, pessimism regarding one’s initial conditions (e.g., living in poverty) may have spillover effects on one’s future labor market outcomes.

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File URL: http://econ.appstate.edu/RePEc/pdf/wp0711.pdf
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Bibliographic Info

Paper provided by Department of Economics, Appalachian State University in its series Working Papers with number 07-11.

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Date of creation: 2007
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Handle: RePEc:apl:wpaper:07-11

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Web page: http://www.business.appstate.edu/departments/economics/
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  17. Clare Anderson & David L. Dickinson, 2009. "Bargaining and Trust: The Effects of 36hr Total Sleep Deprivation on Socially Interactive Decisions," Working Papers 09-01, Department of Economics, Appalachian State University.
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  19. Dickinson, David L., 2006. "The chilling effect of optimism: The case of final-offer arbitration," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(1), pages 17-30, February.
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Cited by:
  1. Anya C. Savikhin & Roman M. Sheremeta, 2013. "Simultaneous Decision-Making In Competitive And Cooperative Environments," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1311-1323, 04.

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