Constrained Data-Fitters, with Samuelson, presentation
draft coming soon
Growth and Likelihood, with Samuelson, presentation, video
We examine a stochastic growth process that can alternatively be interpreted as a model of economic
growth, financial portfolio management, statistical inference, or biological
population growth. For the economic
interpretation, we find that the growth-maximizing policy satisfies a
meritocracy principle: it minimizes the discrepancy between the resource shares
allocated to the agents and the agents' ``merits.'' For the statistical interpretation, the
setting is equivalent to a model of predictive coding, in which a misspecified system maximizes the fit of data. A
consistency principle analogous to the meritocracy principle requires the
optimal fit to minimize a degree of Bayes inconsistency.
Boundedly
Rational Demand, r&r in Theoretical Economics with Kocourek and Stewart,
Evidence suggests that consumers do not perfectly
optimize, contrary to a critical assumption of classical consumer theory. We
propose a model in which consumer types can vary in both their preferences and
their choice behavior. Given data on demand and the
distribution of prices, we identify the set of possible values of the consumer
surplus based on minimal rationality conditions: every type of consumer must be
no worse off than if they either always bought the good or never did. We
develop a procedure to narrow the set of surplus values using richer datasets
and provide bounds on counterfactual demands.
Risk Perception, r&r in JEEA,
with Netzer, Robson and Kocourek, presentation
In a model inspired by neuroscience, we study choice
between lotteries as a process of encoding and decoding noisy perceptual
signals. The implications of this process for behavior
depend on the decision-maker’s understanding of the risk. The encoding strategy
does not influence choice in the limit as perception noise vanishes when the
decision-maker correctly understands the decision problem during decoding. If,
however, the decision-maker underrates the complexity of the decision problem,
then the encoding strategy generates behavioral risk
attitudes even for vanishing perception noise. We show that constrained optimal
perception encodes lottery rewards using an S-shaped encoding function and
over-samples low-probability events. Taken together, the model can explain
adaptive risk attitudes and probability weighting as in prospect theory.
Additionally, it predicts that risk attitudes are influenced
by the anticipation of risk, time pressure, experience, salience, and
availability heuristics.
Decision Theory and Stochastic
Growth, with Robson
and Samuelson, American Economic Review: insights 5(3),
2023, 357-76 presentation, přednáška,
homework assignment
This paper examines connections between stochastic
growth and decision problems. We use
tools from the theory of large deviations to show that wishful
thinking decision problems are equivalent to utility maximization
problems, both of which are equivalent to growth maximization under
idiosyncratic risk. Rational inattention
problems are equivalent to growth-optimal portfolio problems, both of which are
equivalent to growth maximization under aggregate risk. Stochastic growth
generates extreme inequality, with nearly all wealth eventually held by those
who happen to have faced empirical distributions that match the solution to the
wishful thinking or rational inattention problem.
Attention
Please! with Gossner and Stewart, 2021, Econometrica 89(4), 1717-1751,
presentation, puzzle
We study the impact of manipulating the attention of a
decision-maker who learns sequentially about a number of items before making a
choice. Under natural assumptions on the decision-maker's strategy, directing
attention toward one item increases its likelihood of being chosen regardless
of its value. This result applies when the decision-maker can reject all items
in favor of an outside option with known value; if no
outside option is available, the direction of the effect of manipulation
depends on the value of the item. A similar result applies to manipulation of
choices in bandit problems.
Optimal Test Allocation,
2021, with Ely, Galeotti
and Jann, J.
Econ. Theory 105236
Rotation as Contagion
Mitigation, 2021, with Ely and Galeotti,
Management Science, 67(5), 3117-3126
(ideas from this paper have been incorporated into the DELVE
report of the Royal Society)
Habits as Adaptations: An
Experimental Study, 2020, with Matyskova,
Rogers, and Sun, presentation, Game
Econ Behav 122, 391-406
Selective
Sampling with Information-Storage Constraints, 2020, with Jehiel, presentation, Economic Journal, 1753-1781
On the Cost of
Misperception: General Results and Behavioral
Applications, 2018, with Gossner, J. Econ.
Theory 177, 816-847, presentation
Rational Inattention Dynamics:
inertia and delay in decision-making, 2017, with Stewart
and Matějka, Econometrica 85(2), 521-553,
presentation, popularizační přednáška
Perceiving Prospects Properly,
2016, with Stewart,
American Economic Review 106,
1601-31, presentation, press
summary by AEA
Price Distortions under Coarse
Reasoning with Frequent Trade, 2015, with Stewart, J.
Econ. Theory 159, 574-595, presentation, supplement
Influential Opinion Leaders,
2014, with Stewart
and Loeper,
Economic Journal 124, 1147-1167
Tractable Dynamic
Global Games and Applications, 2013, with Mathevet, J.
Econ. Theory 148, 2583-2619
Reversibility in Dynamic
Coordination Problems, 2013, with Kováč, Game Econ Behav 77, 298-320
Who Matters in Coordination Problems?,
2012, with Sákovics,
American Economic Review 102(7),
3439-3461
Dynamic
Coordination with Private Learning, 2012, with Dasgupta
and Stewart, Game Econ Behav 74, 83-101
Communication, Timing, and Common Learning,
2011, with Stewart, J.
Econ. Theory 146, 230-247,
(the paper explained on the blog
of Jeff Ely)
Contagion through Learning, 2008, with Stewart, Theoretical
Economics 3, 431-458
Coordination of Mobile Labor, 2008,
J. Econ. Theory 139(1), 25-46
Coordination Cycles, 2008, Game Econ Behav 63(1), 308-327
The Effects of Risk Aversion in Mixed-Strategy
Equilibria of 2x2 Games, 2007, with Engelmann, Game Econ Behav 60, 381-388
A
Trace of Anger is Enough: On the Enforcement of Social Norms, 2007, Economics
Bulletin, vol. 8.
Dynamic
scaling and universality in evolution of fluctuating random networks, 2002,
with Kotrla and Slanina, Europhys. Lett. 60, 14-20