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Motivated Beliefs, Independence and Cooperation

Author

Listed:
  • Wei Huang

    (CUHK Business School, Chinese University of Hong Kong)

  • Yu Wang

    (China Center For Behavioral Economics and Finance, Southwestern University of Finance and Economics)

  • Xiaojian Zhao

    (Department of Economics, Monash Business School, Monash University)

Abstract

Humans are social animals but sometimes stay alone. The paper theoretically investigates the connection between an intraperson game and an interperson interaction. Motivated beliefs supplied from memory management due to present bias in the individual investment problem give rise to a positive spillover on others through social interactions, suggesting that a high frequency of social interactions reduces an individual’s tendency to cooperate with others, exacerbating the free-riding problem. We also establish a positive relationship between overconfidence and prosocial behaviors. Evidence from cross-country observational data and cross-sectional data collected from an online experiment is largely consistent with our theoretical implications.

Suggested Citation

  • Wei Huang & Yu Wang & Xiaojian Zhao, 2023. "Motivated Beliefs, Independence and Cooperation," Monash Economics Working Papers 2023-08, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2023-08
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    motivated beliefs; self-confidence; present bias; cooperation; cultural difference;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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