Research

Working Papers

Beliefs and Biases in Asset Choices: An Experimental Study (Job Market Paper), previously circulated as Belief Updating Under Cognitive Dissonance: An Experimental Study

Cognitive dissonance refers to the psychological tension that arises when individuals hold two conflicting beliefs, views, or actions simultaneously, and within a financial decision-making context, this tension may arise when a subject’s beliefs and asset choices conflict. We investigate the dynamics of belief updating in a setting where cognitive dissonance could play a significant role, by designing an experiment with four treatments. The first treatment simply elicits beliefs. In the subsequent three treatments, subjects are endowed with one of two potential assets at random. Following this, they are asked to report their beliefs regarding their assigned asset after each signal. Subjects have the option to either “switch” or “keep” their initial asset, with associated costs that vary across the three latter treatments (zero, finite, or infinite). By manipulating switching costs, we effectively intensify subjective ownership towards the asset, fostering cognitive dissonance. Our findings indicate that subjects frequently make sub-optimal asset choice decisions when confronted with a finite transaction cost. Furthermore, they tend to distort their beliefs about their endowed asset, aligning their beliefs with their sub-optimal actions to mitigate cognitive dissonance.

Group Bargaining: A Model of International Treaty Ratification, with Ravideep Sethi (Paper, earlier version available at SSRN), Resubmitted (Revise and Resubmit) at Games and Economic Behavior, previously circulated as Group Bargaining and Delegation

Two groups engaged in non-cooperative bargaining over a fixed surplus may differ in size and the supermajority threshold they employ for within-group ratification. A group may also delegate the ability to propose allocations to a subset of members. We find that total allocation to a group does not depend on group size and increases with the supermajority threshold. Within-group inequality is an increasing function of group size and decreases with the supermajority threshold. Finally, we find that delegation decreases the group’s total allocation because non-delegates accept lower allocations. We consider the implications of our results on bilateral treaty negotiation.

Work in Progress

Some Non-Monotonicities in Finite-Period Legislative Bargaining, with Ravideep Sethi

How Supply Shocks in the Primary Market Affect the Secondary Market – From the Used Car Market

Intermediated Persuasion

Information Acquisition and Trading In Common Values Voting