Welcome! I am an Assistant Professor of Economics at the University of Alabama.
I work on behavioral economics, experimental economics, and behavioral finance, with a special focus on the sources and consequences of bounded rationality and belief biases. My CV is here.
Email: qfan5@ua.edu
Evidence from experiments, surveys, and the field has uncovered both underreaction and overreaction to new information. We provide new experimental evidence on the underlying mechanisms of under- and overreaction by comparing how people make inferences and revise forecasts in the same information environment. Participants underreact to signals when inferring about underlying states, but overreact to the same signals when revising forecasts about future outcomes—a phenomenon we term “the inference-forecast gap.” We show that this gap is largely driven by different simplifying heuristics used in the two tasks. Additional treatments suggest that the choice of heuristics is affected by the similarity between statistics in the information environment and the statistic elicited by the belief-updating problem.
Why is in-kind aid a prominent feature of welfare systems? We present a lab-in-the-field experiment involving members of the general U.S. population and SNAP recipients. After documenting a widespread desire to limit recipients’ choices, we quantify the relative importance of (i) welfarist motives, (ii) utility or disutility derived from curtailing another’s autonomy, and (iii) absolutist attitudes concerning the appropriate form of aid. Choices primarily reflect the two non-welfarist motives. Because people systematically misperceive recipient preferences, their interventions are more restrictive than they intend. Interventionist preferences and non-welfarist motives are more pronounced among the political right, particularly when recipients are black.
I design an experiment to document and understand misspecified mental models with an illusion of control, i.e., false beliefs in causal impacts of controllable factors on payoff-relevant outcomes. Participants learn from observational data and then manipulate a randomly assigned variable—their choice variable—to potentially affect a payoff-relevant outcome. I directly elicit participants' mental models about the outcome-generating process and find that their models tend to involve the choice variable, implying an illusion of control when this variable is completely irrelevant. I show that the experience of making choices directly distorts mental models, and provide suggestive evidence that memory plays a mediating role: The choice process causes individuals to selectively retrieve the memory information on the association between their choice variable and the outcome.
We design an experiment to study the role of motivated reasoning in correlation neglect. Participants receive potentially redundant signals about either an ego-relevant state—their IQ test performance—or an ego-irrelevant state. A simple hypothesis based on motivated reasoning predicts asymmetric updating about signal redundancy and about the focal state only in the treatment with ego-relevance. We find qualified support for our hypothesis: participants generally underappreciate the extent to which identical signals are more likely to come from the same source (and thus contain redundant information), but the bias is significantly stronger for ego-favorable signals than for ego-unfavorable signals. This asymmetric effect disappears in the treatment where the focal state is ego-irrelevant. These results suggest that individuals may neglect the correlation between desirable signals to sustain motivated beliefs. However, the asymmetric updating effect on signal redundancy is not quantitatively large enough to generate significant asymmetric updating about the ego-relevant state (own IQ test performance).