Research Interest

Primary Research

My primary research interests are in behavioral/experimental macroeconomics with key emphasis on investigating the presence of boundedly rational behavior on currency designs. Specially, it focuses on the possibility of money illusion on currency redenomination policies and potential effects on the exchange rate. My research utilizes both primary data obtained through designed experiments and secondary financial data to examine this inflation‑motivated currency change policy adopted by many central banks.

Papers in Primary Research Area:

Currency Redenomination and the Nominal Superiority Shock on Exchange Rates: A Time Series Analysis.

A time series forecasting analysis is used to examine movements in exchange rates after currency redenomination. I find evidence of exchange rate depreciation of the currency with nominal superiority shock during the redenomination policy but not for currencies without the shock. The uniqueness in the exchange rate depreciation of the currency affected by the nominal shock is supported by an event study of neighboring currencies with no concurrent redenomination policy. Further evidence of nominal superiority shock on exchange rates is supported by a causality test which shows macroeconomic variables did not cause the exchange rate depreciation.

Evidencing Forex Illusion under Currency Redenomination : Experimental Approach.

Forex illusion, a nominal illusion bias associated with nominal exchange rate and currency conversion decision, is examined in an incentivized experimental setting. To examine this behavioral bias, I conduct an experiment where subjects made optimal currency conversion decision based on the nominal exchange rate with varied prices. The results of the experiment support the presence of Forex Illusion further lending credence to the shift in currency demand and currency depreciation post currency redenomination.

Theorizing Forex Illusion using Evolutionary Algorithms: A Computational Approach.

Abstract: I provide a theoretical explanation for the foreign exchange rate illusion observed in the human experimental data: high nominal exchange rate leads to higher currency conversion and vice-versa. Using Individual Evolutionary Learning (IEL), I design a learning model with precise environment as the human experiment setting. The result from the learning algorithm matches closes with the experimental data.

Second Level Forex Illusion: An IEL Learning and Experimental Approach.

The focus of this research is to examine the influence of nominal bias (money illusion) in a group decision making process within a foreign exchange rate market. To study this nominal bias, I adopt three different experimental settings in a multi-currency environment (i.e. complementary, substitute and neutral settings). Participants are placed in two different nominal exchange rate treatments (i.e. high and low nominal exchange rate). Using oTree, I design an interactive human laboratory experiment where participants make an incentive compatible decision. To better understand the results from human experiment, I conduct a computational exercise using an individual evolutionary learning algorithm with similar features as the laboratory experiment.

Secondary Research:

My secondary research is in the area of strategy and management where we consider the impact of mandated corporate social responsibility on courtroom outcomes. We examine this in the Indian context where banks are mandated to assign a portion of their assets to some government priority sectors (agriculture, education).

Papers in Secondary Research Area:

"Guilty Until Proven Otherwise: High Status and the Burden of Proof under Socialism" (with Rajiv Krishnan Kozhikode and Rekha Krishnan).

Abstract: In this paper, we re-examine extant status theory’s central assumption that high-status actors are beneficiaries of biased evaluations of their audience. While this assumption is consistent with the principles of free-market capitalism, where societal institutions encourage and reward individual economic and social aspirations and wealth accumulation, it is inconsistent with the principles of socialism that view high-status actors as the source of inequality and seek to remedy it by redistributing the excess wealth of high-status actors to low-status actors. So, we contend that, in socialist settings, high-status firms invoke a negative stereotype in the eyes of their evaluators. They may use a firm’s high status as a heuristic of bad behavior and rule against it. This negative stereotype held against high-status firms in socialist settings may be more decisive when a left-wing government is in power, but a high-status firm may demystify the stereotype when its visible actions run contrary to the stereotype. We find support for our theory in our analysis of the verdicts on lawsuits between commercial banks in India and their defaulting borrowers in the High Court of Kerala, an Indian state reputed for its deep-rooted socialist leaning.