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.
Funding SchemeERC-ADG - Advanced Grant
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