Assistant Professor
Department of Management, UTSC
Rotman School of Management
University of Toronto

Research Interests
Behavioral Economics
Experimental Economics
Household Finance
Repugnant Transactions
Rational Inattention

Contact Information
105 St. George Street
Toronto, ON, M5S 3E6
+1 (647) 981 63 84


More Money, More Problems? Can High Pay Be Coercive and Repugnant? (with Muriel Niederle and Alvin E. Roth) 
American Economic Review: Papers & Proceedings, 2015, 105(5): 357-360 
IRBs can disallow high incentives they deem coercive. A vignette study on MTurk concerning participation in medical trials shows that a substantial minority of subjects concurs. They think high incentives cause more regret, and that more people would be better off without the opportunity to participate. We model observers as judging the ethicality of incentives by partially using their own utility. The model predicts that payments are repugnant only to the extent that they affect the participation decision, and more so for larger transactions. Incentivizing poorer participants is more repugnant, and in-kind incentives are less repugnant than monetary incentives. 

American Economic Review: Papers & Proceedings, 2017, 107(5): 91-95.
Our recent working paper (Ambuehl, Ockenfels, and Stewart, 2017) shows theoretically and experimentally that people with higher costs of information processing respond more to an increase in the incentive for a complex transaction, and decide to participate based on a worse understanding of its consequences. Here, we address the resulting tradeoff between the principle of informed consent and the principle of free contract. Respondents to our vignette study on oocyte donation overwhelmingly favor the former, and support policies that require donors to thoroughly understand the transaction. This finding helps design markets that are not only efficient, but also considered ethical. 

Games and Economic Behavior, 2018, 109: 21-39. 
How do individuals value noisy information that guides economic decisions? In our laboratory experiment, we find that individuals underreact to increasing the informativeness of a signal, thus undervalue high-quality information, and that they disproportionately prefer information that may yield certainty. Both biases are entirely due to non-standard belief updating, rather than due to non-standard risk preferences. We find that individuals differ consistently in their responsiveness to information - the extent that their beliefs move upon observing signals. Individual parameters of responsiveness to information have out-of-sample explanatory power in two distinct choice environments and are unrelated to proxies for mathematical aptitude. 

Working Papers

Media coverage: Maginal Revolution ("the most interesting job market paper of the year"), Washington PostFrankfurter Allgemeine ZeitungBugsfeed 
Economists often espouse incentives, arguing that expanding choice sets cannot lower welfare. Yet, laws worldwide restrict incentives for many transactions, partly due to an untested concern that incentives cause poor decisions. I show experimentally that incentives skew information gathering and beliefs about what a transaction entails in a way that causally influences the participation decision, as policy makers suspected. A model of costly information acquisition shows this behavior is consistent with rationality, and thus unconcerning from an ex ante welfare economic perspective, but demands consideration under reasonable alternatives. The mechanisms apply in any situation where incentives interact with information acquisition.

Unraveling Over Time (with Vivienne Groves, submitted) 
Unraveling, the excessively early matching of future workers to employers, is a pervasive phenomenon in entry-level labor markets that leads to hiring decisions based on severely incomplete information. We provide a model of unraveling in one-to-one matching markets for prestigious positions. Its distinguishing feature is that the market operates over an extended time period during which information about potential matches arrives gradually. We find that unraveling causes potentially thick markets to spread thinly over a long time period. In equilibrium, an employers desirability is correlated neither with the time at which they hire, nor with the expected productivity of their matched worker. Unraveling thus significantly redistributes welfare among employers compared to a pairwise stable match. We study policies that manipulate the availability of information about students and show that they are effective only if they provide a sudden surge in information. Our main application is the market for U.S. federal appellate court clerks, a significant input into the efficiency of the justice system. Consistent with the model, hiring times in our dataset are spread over a period of six months and are uncorrelated with the desirability of a judge as an employer.

(with B. Douglas Bernheim and Annamaria Lusardi, submitted) 
Media Coverage: Financial Times
We introduce a method for measuring the quality of financial decision making built around a notion of financial competence, which gauges the alignment between individuals' choices and those they would make if they properly understood their opportunities. We use it to document the potential pitfalls of the types of brief rhetoric-laden interventions commonly used for adult financial education. Motivational rhetoric can render the effects of such interventions indiscriminate even when people appear to understand and internalize the targeted concepts. Conventional methods of evaluation involving financial literacy, self-reported decision strategies, and directional effects on choices do not reliably detect these deficiencies. 

Peer Effects in Financial Decision Making - A Case of the Blind Leading the Blind? (with B. Douglas Bernheim, Fulya Ersoy, and Donhatai Harris) 
Often, people consult with others for advice before they make financial decisions. Previous research argues that such communication amounts to a case of the blind leading the blind. In this paper, we document that it can be beneficial, and explore mechanisms. In our laboratory experiment, subjects make private decisions about investments involving compound interest both before and after they communicate with a randomly assigned partner. Communication not only improves decision making for the specific tasks they have sought advice about, but subjects successfully generalize these skills to novel decision problems. We find that communication is most beneficial when pair members’ skills are at similar levels — the transmission of financial competence requires a common language, and is not merely a case of information flowing from those who have it to those who do not. Finally, communication leads subjects to reevaluate their privately revealed time preferences. Discount rates move towards the communication partners’ rate, and do so to a larger extent if the partner is more patient. We suggest policies to improve the quality of financial decision making.

Work in Progress

For They Know Not What They Do. Selection Through Incentives when Information is Costly. (with Axel Ockenfels and Colin Stewart) [Slides]
Who participates in transactions when information about the consequences must be learned? Theoretically, we show that rational decision makers for whom acquiring and processing information is more costly will respond more strongly to incentives for participating, and decide to participate based on worse information. Consequently, with higher incentives, the pool of participants consists of a larger fraction of individuals with a worse understanding of the consequences of their decision. Our behavioral experiment confirms these predictions, both for experimental variation in the costs of information acquisition, and for various laboratory and naturally occurring measures of information costs, including cognitive ability. These findings are relevant for any transaction in which a price paid for participation trades off with not fully understood yet learnable consequences. Our results also clarify the relation between incentives and the ethical principle of informed consent, and thus help address ethical concerns with incentives. 

The Empirical Moral Limits of Markets 
Many transactions such as kidney donation, experiment participation and surrogate motherhood cannot legally be done in exchange for money, or only under tight restrictions. When and why do people feel a need to paternalistically prevent others from engaging in voluntary transactions? Subjects in my experiment decide whether to prevent future participants from being offered a voluntary transaction of eating disgust-evoking items (such as large scorpions) at a variety of prices. A large fraction of transactions are prevented. Subjects dislike incentives for the very reason that they influence others' behavior -- they more often prevent an incentive to someone who has already refuse to participate at a lower incentive than to a random future participant. Subjects are particularly concerned about incentives if they believe the incentivized person lacks well-defined preferences over the transaction. Specifically, they prevent transactions more often if they believe the incentive itself influences others' reservation prices. These comparative statics arise from gut feelings rather than careful deliberation: the modal participant is a naive paternalist who imposes his own preferences onto others by allowing the offers he would accept himself, and preventing those he would reject. These findings help understand the moral limits of markets, and provide guidance towards designing markets that are less likely viewed as morally repugnant. 

Awards and Grants


Team member, ERC advanced grant “Economic Engineering of Cooperation in Modern Markets” (team leader: Axel Ockenfels)


Alfred P. Sloan Foundation Grant “Using Behavioral Welfare Economics to Improve Financial Decision Making” (with B.D. Bernheim, US$474,606)

Connaught New Researcher Award, University of Toronto (CA$35,000)

Wynne and Beryl Plumptre Fellowship at the University of Toronto Scarborough (CA$ 9,000)


TIAA-CREF grant "Financial Education, Financial Competence and Consumer Welfare" (with B. D Bernheim and A. Lusardi, US$107,567)


Barbara Finberg Fellowship, Stanford University 

Fulbright grant (declined for administrative reasons)