Related papers: Does Anxiety Improve Economic Decision-Making?
As a firm varies the price of a product, consumers exhibit reference effects, making purchase decisions based not only on the prevailing price but also the product's price history. We consider the problem of learning such behavioral…
We study the distributional implications of uncertainty shocks by developing a model that links macroeconomic aggregates to the US distribution of earnings and consumption. We find that: initially, the fraction of low-earning workers…
An agent acquires a costly flexible signal before making a decision. We explore to what degree knowledge of the agent's information costs helps predict her behavior. We establish an impossibility result: learning costs alone generate no…
Dynamic decisions are pivotal to economic policy making. We show how existing evidence from randomized control trials can be utilized to guide personalized decisions in challenging dynamic environments with budget and capacity constraints.…
This paper explores the identification of smartphone users when certain samples collected while the subject felt happy, upset or stressed were absent or present. We employ data from 19 subjects using the StudentLife dataset, a dataset…
People are often reluctant to sell a house, or shares of stock, below the price at which they originally bought it. While this is generally not consistent with rational utility maximization, it does reflect two strong empirical regularities…
Choice overload occurs when individuals feel overwhelmed by an excessive number of options. Experimental evidence suggests that a larger selection can complicate the decision-making process. Consequently, choice satisfaction may diminish…
Decision support tools enable improved decision-making for challenging decision problems by empowering stakeholders to process, analyze, visualize, and otherwise make sense of a variety of key factors. Their intentional design is a critical…
Central to privacy concerns is that firms may use consumer data to price discriminate. A common policy response is that consumers should be given control over which firms access their data and how. Since firms learn about a consumer's…
We consider situations where consumers are aware that a statistical model determines the price of a product based on their observed behavior. Using a novel experiment varying the context similarity between participant data and a product, we…
Decisions by humans depend on their estimations given some uncertain sensory data. These decisions can also be influenced by the behavior of others. Here we present a mathematical model to quantify this influence, inviting a further study…
Understanding how frequently people experience different kinds of daily stressors is crucial for interpreting stress exposure and informing mental health care. But it can't be directly estimated from current assessment methods, such as…
We study how a monopolist's use of consumer data for price discrimination affects welfare. To answer this question, we develop a model of market segmentation subject to residual uncertainty. We fully characterize when data usage…
Do language models make decisions under uncertainty like humans do, and what role does chain-of-thought (CoT) reasoning play in the underlying decision process? We introduce an active probabilistic reasoning task that cleanly separates…
A decision maker starts from a judgmental decision and moves to the closest boundary of the confidence interval. This statistical decision rule is admissible and does not perform worse than the judgmental decision with a probability equal…
I show that firms price almost competitively and consumers can infer product quality from prices in markets where firms differ in quality and production cost, and learning prices is costly. Bankruptcy risk or regulation links higher quality…
We study the welfare effects of overreaction to information in the form of diagnostic expectations in markets with asymmetric information, and the effect of a simple intervention in the form of a tax or a subsidy. A large enough level of…
Economists often estimate economic models on data and use the point estimates as a stand-in for the truth when studying the model's implications for optimal decision-making. This practice ignores model ambiguity, exposes the decision…
The use of Artificial Intelligence (AI), or more generally data-driven algorithms, has become ubiquitous in today's society. Yet, in many cases and especially when stakes are high, humans still make final decisions. The critical question,…
We consider a decision maker (DM) who, before taking an action, seeks information by allocating her limited attention dynamically over different news sources that are biased toward alternative actions. Endogenous choice of information…