Research >> Decision-making

A review of Joshua Greene's recent book Moral Tribes, with special attention to the consequences of India's highly fragmented society for the trustworthiness of ethical intuition. Review published in Economic and Political Weekly, Vol - L No. 48, November 28,...Read More..

Earlier studies have documented an “identifiable victim effect”: people donate more to help individual people than to groups. Evidence suggests that this is in part due to an emotional reaction to the identified recipients, who generate more sympathy. However, stereotype research has...Read More..

Abstract: Despite profoundly negative health consequences of indoor air pollution, most rural Indian households cook using traditional biomass fuel, rather than cleaner cooking fuel. Although many factors contribute to households’ continued use of solid fuels, this paper focuses on one: women’s intra-household status. We...Read More..

Poor people often exhibit puzzlingly high sensitivity to low prices of important consumer health goods. This paper proposes decision costs as one explanation: whether a person buys at a price depends on whether she carefully considers the offer, which itself depends on...Read More..

Do the repayment requirements of the classic microfinance contract inhibit investment in high-return but illiquid business opportunities among the poor? Using a field experiment, we compare the classic contract which requires that repayment begin immediately after loan disbursement to a contract that includes a...Read More..

Financial stress is widely believed to cause health problems. However, policies seeking to relieve financial stress by limiting debt levels of poor households may directly worsen their economic well-being. We evaluate an alternative policy –increasing the repayment flexibility of debt contracts....Read More..

Some experimental participants are averse to compound lotteries: they prefer simple lotteries that depend on only one random event, even when the simple lotteries offer lower expected value. This paper proposes that many behavioral “investments” represent more compound risk for...Read More..

 Reference-dependent decision-making – the core of behavioral economics’ prospect theory – makes people more likely to choose an outcome that they expect to receive. Reference-dependence therefore may imply the perpetuation of disadvantage: people who do not expect an opportunity may...Read More..

Larger reactions to earlier incentives are usually attributed to time preference. However, cognitive limits could also generate behavior that appears impatient. We present a simple model illustrating “local” intertemporal decisions, then apply this interpretation to the puzzle of monthly consumption increases upon...Read More..

Economic theory and conventional wisdom suggest that time preference can cause or perpetuate poverty. Might poverty also or instead cause impatient or impulsive behavior? This paper reports a randomized lab experiment and a partially randomized field experiment, both in India,...Read More..

How would a boundedly rational agent react to a larger menu? I model bounded rationality as choice from an unobservable, subjective consideration subset. Consideration sets satisfy Sen's (1969) property alpha: larger objective choice sets can generate smaller consideration sets. In...Read More..