In decision problems under uncertainty, the subjective evaluation of an outcome can depend on the information content of its realization. To accommodate this dependence, we introduce and axiomatize a model of information-dependent expected utility by allowing the utility of an outcome to flexibly depend on its information content in an (Anscombe-Aumann) act. Subjective beliefs are identified in a special class of our model where the utility of an outcome can be decomposed as the sum of consumption utility and information utility. Our model allows for both information seeking and information averse preferences, as well as a comparative theory of information preferences. For information seeking preferences, we introduce a Hidden Acts representation where the value of information is as if induced from the expected utility of the optimal choice in a fictitious future decision problem given that information.
PhD Program, Economics
PhD Program Office
Graduate School of Business
655 Knight Way
Stanford, CA 94305
I am a fifth-year PhD student in Economics at the Stanford Graduate School of Business. I use theoretical and empirical methods to study the foundations and applications of behavioral economics. My current research focuses on topics related to information, uncertainty, and communication. I will be available for interviews at the European Job Market in Rotterdam (Dec 18-19) and the ASSA Annual Meeting in San Diego (Jan 3-5).
Job Market Paper
Using both experimental and observational data, I study how people react to new information when the accuracy of its source is uncertain. Compared to the case of known information accuracy, subjects in a lab experiment under-react to information with uncertain accuracy. In addition, the reactions are biased toward the pessimistic direction. Evidence from the US stock market also corroborates these findings. In response to upward revisions in analyst earnings forecasts, stock prices react less sufficiently if the revisions are issued by analysts with no past forecast records. In contrast, for downward forecast revisions, the sufficiency of stock price reactions does not depend on whether the issuing analysts have past records or not. These patterns are inconsistent with standard expected utility theory, but are consistent with a theory of belief updating where agents are insensitive and averse to compound uncertainty and ambiguity. I also find that individuals' reactions to information with uncertain accuracy are uncorrelated with their evaluations of bets with uncertain odds. This suggests that people have distinct attitudes toward uncertainty in fundamentals and uncertainty in information accuracy.
Work in Progress
(with Shannon X. Liu and Hugh Xiaolong Wu) How should firms shape the social comparison process in the workplace to improve employee productivity and to reduce turnover? We conduct a 7-month field experiment in a multi-national spa chain with 160 stores and 5000 spa workers in China. We provide spa workers with bi-weekly messages on either the current performance of a co-worker with similar work experience (T1) or the performance trajectory of a senior co-worker (T2). First, we study how workers' outlook about their future performances and reference points for performance comparison depend on their knowledge about their co-workers' current and past performance. Second, we measure the effects of information treatments on the workers' beliefs about their own future productivity, reference points, stress levels, productivity, attrition, and pro-social behaviors. (AEA RCT ID: 0004281)
(with Shengmao Cao and Tony Fan) We propose a novel commitment contract (CC) with exemption clauses to provide incentives for physical exercises while retaining flexibility. Like a traditional, rigid CC, some money is deposited into an account (by the participant or by a third party) and the participant is allowed to withdraw the money if she attends the gym. Unlike a rigid CC, if a participant reports that she did not go to the gym because of illnesses, injuries, unanticipated obligations, or other pre-specified conditions, she is allowed to withdraw the deposit as well. The participants' reports are not verified, so the effectiveness of such a CC depends on the participants’ aversion to lying. We conduct a field experiment at the Stanford athletic facilities to evaluate the demand for and the effectiveness of a CC with exemptions, in comparison to a rigid CC and a control contract without incentives.
Last Updated 19 Oct 2019