Investigating Trust and Generosity in Adolescents through Standard Economic Games: Incorporating Socioeconomic Status as a Factor

Abstract

This thesis discusses two research studies based on decision-making in a financial context. Both studies use different frameworks to understand the behavioural impact on monetary decision-making. The first study focused on understanding the variation in trust and generosity in Indian adolescents as a function of their socioeconomic status using standard economic games. Human prosocial behaviour is predominantly shaped by the socio-cultural environment. Trust and generosity are integral behavioural characteristics that sculpt our interactions within the social frameworks and experience significant changes during adolescence. Considering the complex socioeconomic strata in India, young Indian adolescents serve as a relatively unexplored demographic for examining behavioural characteristics relative to socioeconomic status (SES). We use four standard economic games to explore the dynamics of trust, generosity, and reciprocity dynamics in 13- to 16-year-old individuals. Results show generosity in the Ultimatum game positively correlated to SES, with no clear trend observed in the Dictator game. Across SES groups, the majority of the participants demonstrated non-trusting behaviour in the Centipede and Trust games. We identified a mid-SES group with an atypical decline in trust and sharing behaviour, which we attribute to higher competitiveness in real life by this cohort. This unique behaviour requires deeper analysis from a socio-economic understanding of this particular group. The second study is based on analysing visual gaze and underlying information processing in stock market investments. Investors rely on judgmental heuristics and comparative analysis for future stock price prediction based on specific components of information in hand. Through an eye-tracking experiment, we aim to understand the perceived significance of various formats of information, particularly focusing on graphical and numerical components, and to explore the influence of complex time-varying patterns in stock price line plots. Results show that graphical components capture higher visual attention. Participants are not always loss-averse and prominently exhibit disposition effects for investment decisions in profitable scenarios. The visual gaze analysis provided behavioural insights into complex decision-making processes.