Research

Research Papers

Optimal Learning When Forgetting (Job Market Paper)

Memory plays a crucial role in decision-making, yet economic models often treat memory imperfections as exogenous rather than as outcomes of choice. This paper studies whether individuals endogenously shape their memory retention through learning effort, and how their beliefs about their own forgetting influence these choices. I develop a theoretical model where a decision-maker chooses how much costly effort to exert to study previously learned information, to be able to recall it at a future date. When the individuals are uncertain about their memory strength, receiving a signal about their forgetting by making an attempt to recall the information prior to making the effort choice explains well-known facts of memory such as the spacing effect. I conduct a laboratory experiment with a novel design in which participants choose how much to review information before an incentivized test. The results show that participants expect to forget more as time passes and allocate greater effort when anticipating greater forgetting. They also adjust their choices in response to feedback about their current memory strength: negative signals lead to higher subsequent effort. These findings suggest that individuals deliberately manage their memory through effort, taking into account how much they will forget.

Eliciting Present Bias Under Uncertainty (draft available upon request) with Johannes Hoelzemann and Yoram Halevy

We experimentally investigate intertemporal preferences under uncertainty. Our novel design allows the direct comparison of intertemporal preferences for certain, risky, and ambiguous future monetary rewards using choice lists. The results of our experiments suggest a significant impact of risk and ambiguity on time preferences: there is a lower incidence of present bias and a higher incidence of stationarity for uncertain payments compared to certain payments. Further, present bias for certain payments is correlated with static ambiguity aversion. We also investigate possible contamination of the elicited time preferences for immediate certain payments from the choice lists. This robustness experiment consists of a single binary choice problem and shows that present bias might even be underestimated using choice lists.

Vulnerability as Strength: Trusting as a Credible Signal of Competence (draft available upon request) with Yuval Deutsch and Sabrina Deutsch Salamon

Why people trust without sufficient information about the trustworthiness of the other is a major puzzle in trust research. Drawing on evolutionary psychology signaling logic, we develop a formal model that offers a novel explanation as to why leaders make this seemingly irrational decision. We demonstrate that leaders can signal superior competence by assuming the risk inherent to trusting. Credibly communicating competence, in turn, leads to improved outcomes for these leaders and their followers alike. We show that signaling is a viable strategy only for leaders with superior competence, who trust precisely because the risk they take renders that signal credible. The effectiveness of the signaling is determined by the leaders’ knowledge of their subordinates’ trustworthiness, the impact of subordinates’ felt trust, and managers’ overconfidence.

Work In Progress

Disentangling Pure Time Preferences with Yoram Halevy

Making decisions about the future is fundamentally related to the evaluation of uncertainty; any outcome expected to occur in the future is inherently uncertain. We propose a new experimental method to separate the pure time preferences from the discounting that arises due to this inherent uncertainty of future. The experiment consists of two parts. In the first part, we find the present probability equivalents for both a certain future payment and a risky future payment. In the second part, we measure the probability weighting function for immediate payments. We use the subproportionality of the probability weighting function to elicit the perceived probability of survival for any future payment, assuming that it is evaluated within the same probability weighting function for any risky payment.

Bounded Rationality in Decentralized Matching Markets with Sean M. T. Elliott