Selected Papers

When Mandatory Disclosure Hurts: Expert Advice and Conflicting Interests

We study the quality of advice that an informed and biased expert gives to an uninformed decision maker. We compare two scenarios: mandatory disclosure of the bias and nondisclosure, where information about the bias can only be revealed through cheap-talk. We find that in many scenarios nondisclosure allows for higher welfare for both parties. Hiding the bias allows for more precise communication for the more biased type and, if different types are biased in different directions, may allow for the same for the less biased type. We identify contexts where equilibrium revelation allows but mandatory disclosure prevents meaningful communication.

(with Ming Li)

Journal of Economic Theory

Information Projection: Model and Applications

People exaggerate the extent to which their information is shared with others. This paper introduces the concept of such information projection and provides a simple but widely applicable model. The key application describes a novel agency conflict in a frictionless learning environment. When monitoring with ex post information, biased evaluators exaggerate how much experts could have known ex ante and underestimate experts on average. Experts, to defend their reputations, are too eager to base predictions on ex ante information that substitutes for the information jurors independently learn ex post and too reluctant to base predictions on ex ante information that complements the information jurors independently learn ex post. Instruments that mitigate Bayesian agency conflicts are either ineffective or directly backfire. Applications to defensive medicine are discussed.

Review of Economic Studies

Conscience Accounting: Emotion Dynamics and Social Behavior

This paper presents theory and experiments where people's prosocial attitudes fluctuate over time following the violation of an internalized norm. We report the results of two experiments in which people who first made an immoral choice were then more likely to donate to charity than those who did not. In addition, those who knew that a donation opportunity would follow the potentially immoral choice behaved more unethically than those who did not know. We interpret this increase in charitable behavior as being driven by a temporal increase in guilt induced by past immoral actions. We term such behavior conscience accounting and discuss its importance in charitable giving and in the identification of social norms in choice behavior through time inconsistency.

(with Uri Gneezy and Alex Imas)

Management Science

Sellers with Misspecified Models

Principals often operate on misspecified models of their agents’ preferences. When preferences are such that non-local incentive constraints may bind in the optimum, even slight misspecification of the preferences can lead to large and non-vanishing losses. Instead, we propose a two-step scheme whereby the principal: (1) identifies the model-optimal menu; and (2) modifies prices by offering to share with the agent a fixed proportion of the profit she would receive if an item were sold at the model-optimal price. We show that her loss is bounded and vanishes smoothly as the model converges to the truth. Finally, two-step mechanisms without a sharing rule like (2) will not yield a valid approximation.

(with Andrea Prat)

Review of Economic Studies

Pricing under Fairness Concerns:

This paper proposes a theory of pricing premised upon the assumptions that customers dislike unfair prices—those marked up steeply over cost—and that firms take these concerns into account when setting prices. Because they do not observe firms’ costs, customers must extract costs from prices. The theory assumes that customers infer less than rationally: When a price rises due to a cost increase, customers partially misattribute the higher price to a higher markup—which they find unfair. Firms anticipate this response and trim their price increases, which drives the passthrough of costs into prices below one: Prices are somewhat rigid. Embedded in a New Keynesian model as a replacement for the usual pricing frictions, our theory produces monetary nonneutrality: When monetary policy loosens and inflation rises, customers misperceive markups as higher and feel unfairly treated; firms mitigate this perceived unfairness by reducing their markups; in general equilibrium, employment rises. The theory also features a hybrid short-run Phillips curve, realistic impulse responses of output and employment to monetary and technology shocks, and an upward-sloping long-run Phillips curve.

(with Erik Eyster and Pascal Michaillat)

Journal of the European Economic Association

Bargaining under the Illusion of Transparency

This paper studies bargaining with noncommon priors where the buyer projects and exaggerates the probability that her private information may leak to the seller. Letting the buyer name her price first, raises the seller's payoff above his payoff from posting a price. In seller-offer bargaining, projection implies a partial reversal of classic Coasian comparative static results. Weakening price commitment can benefit the seller and, as long as the relative speed at which imaginary information versus offers arrive does not converge to zero too quickly, frictionless bargaining converges to a fast haggling process which allows the seller to extract all surplus from trade. Bargaining under common prior transparency is instead slow and becomes equivalent to simply waiting. The comparative static predictions are consistent with experimental evidence.

American Economic Review

Superiority Seeking and the Preference for Exclusion

We propose that a person’s desire to consume an object or possess an attribute increases in how much others want but cannot have it. We term this motive imitative superiority-seeking and show that it generates preferences for exclusion that help explain a host of market anomalies and make novel predictions in a variety of domains. In bilateral exchange, trade becomes more zero-sum, leading to an endowment effect. People’s value of consuming a good increases in its scarcity, which generates a motive for firms and organizations to engage in exclusionary policies. A monopolist producing at constant marginal cost can increase profits by randomly excluding buyers relative to the standard optimal mechanism of posting a common price. In the context of auctions, a seller can extract greater revenues by randomly barring a subset of consumers from bidding. Moreover, such non-price-based exclusion leads to higher revenues than the classic optimal sales mechanism. A series of experiments provides direct support for these predictions. In basic exchange, a person’s willingness to pay for a good increases as more people are explicitly barred from the opportunity to acquire it. In auctions, randomly excluding people from the opportunity to bid substantially increases bids amongst those who retain this option. Consistent with our predictions, exclusion leads to bigger gains in expected revenue than increasing competition through inclusion. Our model of superiority-seeking generates “Veblen effects,” rationalizes attitudes against redistribution and provides a novel motive for social exclusion and discrimination.

(with Alex Imas)

Review of Economic Studies

Projective Thinking: Model, Evidence, and Applications

(with David Danz and Stephanie Wang)

Combines:

Projection Equilibrium: Definition and Applications to Social Investment, Communication, and Trade (2016 version)

and

The Biases of Others: Projection Equilibrium in an Agency Setting

(with David Danz and Stephanie Wang)

Limited Perspective Taking in Strategic Communication

solicited accepted, Economica

Cost over Content: Information Choice in Trade

(with Marek Pycia)

R&R Journal of Political Economy

Earlier version: Towards a Resolution of the Privacy Paradox (2020) downloads 2020-2021 link (time) link (location)

Abstract in 6th Symposium on Foundations of Responsible Computing (FORC 2025):

 
How much would buyers pay to have some control over what a seller knows about them? When deciding what information to provide to her counterpart, a privately-informed trader chooses between options that may differ both in their contents and in their costs. For a large class of static and dynamic trading environments where buyers choose from arbitrary sets of signal processes that reveal or obfuscate information to a seller, we establish a "cost-over-content" theorem. In equilibrium, buyers only choose cheapest processes, regardless of the information content they provide. Pooling on any cheapest process is an equilibrium. Our paper uncovers a general source of market failure linked to the direct cost of information choice with consequences for the role of information defaults. We explore applications to bargaining, signaling, disclosure, consumer privacy, and data trade. At the FORC presentation we focus on the privacy application. Our cost-over-content results explain why consumers may choose little protection of their private information even when protecting it would improve their welfare; we show that this so-called privacy paradox is an equilibrium phenomenon driven by market power. Our results also lead to predictions on how an online-shopping platform provider designs the information flows between sellers and the buyers. While the platform can charge both the buyer and the seller for its offering of information structures, following the logic of our cost-over-content theorem, we show that the platform neither charges nor compensates the buyer for choosing an information structure. At the same time, the platform charges the seller and maximizes the value of the information passed to the seller, as measured in the seller’s direct profit from interacting with the buyer. This asymmetry is relevant for the impact of the widespread ability to track consumers on economic outcomes and the distribution of gains from trade, and it is relevant for the effectiveness of various consumer-protection policies.

Jealousy of Trade: Exclusionary Preferences and Economic Nationalism

(with Alex Imas and Heather Sarsons)

Work-in-Progress

Transactional Preferences and Public Policy with Application to the Minimum Wage

(with Anna Becker, Attila Lindner, and Heather Sarsons)

Information Choice in Bilateral Bargaining

(with Marek Pycia)

Alfa-function inflation and the abolishment of the Self

Old Papers:

Rational and Entrepreneurial Actions

Kein Regel wollte da passen, und war doch kein Fehler drin.

A Model of Attention and Anticipation

We develop a model in which people experience standard consumption utility, as well as anticipatory utility defined as the weighted sum of independently anticipated consumption “episodes” or “dimensions”. The weights on these dimensions correspond to the attention that the person pays to the dimension. We assume attention on a dimension increases when expected consumption utility in the dimension differs from expected consumption utility under the default action or the prior belief. We show that the decision maker will pay more for information about dimensions with high expected consumption utility, and the willingness to pay may be negative when expected consumption utility is low. Additionally, when expected consumption utility is sufficiently low, but not when it is high, the decision maker will follow the default action even if it is suboptimal from a consumption standpoint. Furthermore, given the decision maker’s current beliefs and preferences in a dimension, he will consume more in that dimension if he just received information. We then consider an advertisement application in which a monopolist decides whether to certifiably reveal the quality of various exogenous attributes of a good to a consumer who may choose to buy or not. There exists a sequential equilibrium for which the monopolist will not disclose information for attributes in which the consumer’s utility with the highest quality good is sufficiently worse than not buying the good. Competition increases disclosure

(with Josh Tasoff)

Recent Conference Organizatons:

1. European Economic Theory Conference (2026): link

2. European Economic Theory Conference (2025): link

3. Conference on behavioral political economy (2023): link

4. Conference on behavioral incentives (2022): link