Topics in Behavioral-Economics Theory

November, 2018 to October, 2023
EU Horizon 2020 - ERC Advanced Grant

This proposal outlines projects that span a diverse set of specific topics in both the foundational and the more applied parts of behavioral-economics theory.

In the foundational projects, I will develop broadly applicable models of individual decisionmaking that incorporate psychologically realistic assumptions about individuals, and that can be used by myself and others to study the implications of psychological phenomena for economic outcomes. I will (i) provide an attention-based theory of several central and hitherto unmodeled aspects of mental accounting; (ii) analyze the implications of overconfidence about one's ability or prospects for learning about other economically important variables; and (iii) incorporate into economic settings, and explore some consequences of, the idea that self-esteem— our feelings about ourselves—may be exceedingly fragile.

In the more applied projects, I will use psychologically realistic models to shed light on important economic issues regarding markets and organizations. I will (i) identify market outcomes and especially welfareincreasing regulations when consumers with limited attention make tradeoffs between "browsing" more products superficially and "studying" fewer products in detail; (ii) use a contract-theoretic approach to help understand and possibly undermine organizations that pursue goals its members oppose; (iii) analyze the nature and consequences of procrastination when a person's alternative choices are supplied by the market; (iv) explore the potential for a policy framework centered around informed consent to address privacy concerns in a market where some consumers are naive about product offers; and (v) investigate the implications of financial choice and financial information in a market for retail securities when investors do not understand that issuers are utilizing superior information in designing offers.