ORCID

0009-0009-3611-4222

Date of Award

5-9-2024

Author's School

Graduate School of Arts and Sciences

Author's Department

Economics

Degree Name

Doctor of Philosophy (PhD)

Degree Type

Dissertation

Abstract

This dissertation consists of three self-contained articles in the field of Behavioral and Experimental Economics. Chapter one and three investigate the implications of non-standard preferences, i.e., social preferences for economic decision making. Another common theme in Behavioral Economics is that of bounded rationality. In chapter two, I look at correlation neglect, which is one example of bounded rationality. The first chapter "Circumstances, effort choice and redistribution," investigates the effects of differences in personal circumstances on individual effort choice and on income redistribution. I construct a model in which a worker’s production depends on a combination of circumstances, effort and unknown luck. Theoretically, I find that workers with better circumstances exert less effort on average than those who fail, yet succeed more. This counter-intuitive result has implications for third parties with meritocratic fairness preferences, as they tend to reward effort and offset the effects of luck. This work also implies that heterogeneity in circumstances matters for redistribution. The second chapter "Correlation neglect and overconfidence: theory and experimental evidence," explores how probabilistic reasoning affects the consumption of information, the formation of opinions, and belief updating. I investigate whether correlation neglect leads to overconfidence. I establish that individuals who neglect correlation tend to value and seek additional information more and become more overconfident. I conduct a novel experiment involving endogenous acquisition of highly correlated signals and use two incentivized methods to identify individual levels of correlation neglect. Interestingly, "full neglecters" are willing to pay more for additional information, and high correlation neglecters exhibit greater overprecision. These findings suggest that drawing decision-maker's attention to the high degree of correlation in the information they consume - for instance, because their friend's share similar news on social medias - can mitigate overconfidence. The third chapter "Guilt aversion or social image concern? Evidence from a modified Dictator Game," uses Game Theory to disentangle two motives for pro-social behavior: guilt aversion or social image concerns. I use a dictator game in which I vary the recipient's payoff expectation, and whether they can observe the dictator's action. Increasing expectations only affects guilt-averse dictators, while increased exposure prompts those concerned about their social image to behave more pro-socially. These psychological motivations may be subtle but have significant real-world implications, such as guiding government policies to reduce tax evasion or helping businesses increase employee tips. They will not implement the same policy depending on the population's dominant motives.

Language

English (en)

Chair and Committee

Brian Rogers

Download

Share

COinS