Research

Pricing Redundancy: Correlation Neglect in Information Demand and Belief Formation (draft available upon request)

This paper experimentally investigates how correlation neglect distorts both the ex-ante valuation of information and ex-post belief formation. Motivated by a stylized model, I jointly elicit subjects’ information valuations and posterior beliefs across randomized environments featuring independent, positively correlated, or negatively correlated signals. Asymmetry is documented in how cognitive belief biases affect information demand. Driven by correlation neglect, subjects fail to price in redundancy, overvaluing positively correlated information by 6.5% relative to Bayesian-equivalent independent information. However, when faced with negatively correlated information, although subjects exhibit correlation neglect in their ex-post belief updating, they do not discount the negatively correlated signals ex-ante.

Stereotypes and Memory (draft available upon request)

(joint work with Zhuokun Liu)

Imperfect memory can sustain widely held stereotypes that are inaccurate. To establish causal evidence, we conduct an online experiment where subjects grade a gender-stereotyped quiz and later predict the performance of the same group on a similar quiz. We vary (1) reliance on memory by manipulating access to grading records and (2) the information about the group by manipulating the sample of quiz-takers with different gender performance gaps. Defining the perceived gender performance gap as stereotypes, we find that stereotypes persist more strongly when subjects rely on memory, but only when the gap in the quiz is in the opposite direction of the stereotypes. Then, we extend the standard Bayesian framework to incorporate imperfect memory and find evidence of memory attenuation: subjects place less weight on graded quiz performance by 50%, due to uncertainty and potential contamination in recall, with contamination accounting for 72% of the effect.