University of California at Berkeley
530 Evans Hall
Berkeley, CA 94720
Institutional Affiliation: University of California at Berkeley
NBER Working Papers and Publications
|August 2019||Rules of Thumb and Attention Elasticities: Evidence from Under- and Overreaction to Taxes|
with : w26180
This paper develops and implements a series of tests of costly attention models, in the context of consumer misreaction to opaque prices. We derive a series of predictions about how the sign and magnitude of misreaction varies with stakes. We then test and confirm these predictions in an experiment on consumers’ online shopping decisions in the presence of shrouded sales taxes that are exogenously varied within consumer over time. We find that some consumers systematically underreact to sales taxes while others systematically overreact. But when the stakes increase, consumers who tend to underreact become more sensitive to sales taxes, while consumers who tend to overreact becomes less sensitive to sales taxes. The collection of empirical results implies that consumers use highly heterogen...
|March 2019||Measuring the Welfare Effects of Shame and Pride|
with , , : w25637
Public recognition is a frequent tool for motivating desirable behavior, yet its welfare effects are rarely measured. We develop a portable money-metric approach for measuring the direct welfare effects of shame and pride, which we deploy in a series of experiments on exercise and charitable behavior. In all experiments, public recognition motivates desirable behavior but creates highly unequal emotional consequences. High-performing individuals enjoy significant utility gains from pride, while low-performing individuals incur significant utility losses from shame. We estimate structural models of social signaling, and we use the models to explore the social efficiency of public recognition policies.