Topics in Behavioral · Topics in Behavioral-Economics Theory

This proposal outlines projects that span a diverse set of specific topics in both the foundational and the moreapplied parts of behavioral-economics theory.In the foundational projects, I will develop broadly applicable models of individual decisionmaking thatincorporate psychologically realistic assumptions about individuals, and that can be used by myself andothers to study the implications of psychological phenomena for economic outcomes. I will (i) provide anattention-based theory of several central and hitherto unmodeled aspects of mental accounting; (ii) analyzethe implications of overconfidence about one’s ability or prospects for learning about other economicallyimportant variables; and (iii) incorporate into economic settings, and explore some consequences of, theidea 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 economicissues regarding markets and organizations. I will (i) identify market outcomes and especially welfareincreasingregulations when consumers with limited attention make tradeoffs between “browsing” moreproducts superficially and “studying” fewer products in detail; (ii) use a contract-theoretic approach to helpunderstand and possibly undermine organizations that pursue goals its members oppose; (iii) analyze the natureand 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 concernsin a market where some consumers are naive about product offers; and (v) investigate the implications offinancial choice and financial information in a market for retail securities when investors do not understandthat issuers are utilizing superior information in designing offers.