Behavioral economics is based on the idea that individuals' decisions are affected by systematic and predictable cognitive biases and that these same biases can be leveraged to change behavior and improve decision-making. Insights from behavioral economics have been used to encourage a range of desired behaviors but have rarely been used in disaster preparedness and response, though traditional...

We study a problem of selling a fixed number of goods over a finite and known horizon. After presenting a procedure for computing optimal decision policies and some numerical results on a simple heuristic policy for the problem, we describe results from three experiments involving financially motivated subjects. The experiments reveal that decision makers employ policies of the same form of the...

Psychological and experimental evidence, as well as a wealth of anecdotal examples, suggests that firms may confound fixed, sunk, and variable costs, leading to distorted pricing decisions. This article investigates the extent to which market forces and learning eventually eliminate these distortions. We envision firms that experiment with cost methodologies that are consistent with real-world ...

As options models move from financial markets to corporate decision making, it is fitting to question the simple domain extension of option pricing theory by considering behavioral decision-making biases. We suggest, however, that, given the negative evolutionary consequences of ignoring optionlike investments, organizations invent heuristic rules to counter these biases. We propose the idea of...

Information sampling is often biased towards seeking evidence that confirms one's prior beliefs. Despite such biases being a pervasive feature of human behavior, their underlying causes remain unclear. Many accounts of these biases appeal to limitations of human hypothesis testing and cognition, de facto evoking notions of bounded rationality, but neglect more basic aspects of behavioral contro...

Buyers in commercial real estate markets often pay different prices for comparable properties. We document that distant commercial real estate buyers pay, on average, a premium relative to local buyers, controlling for individual property characteristics as well as time fixed-effects. We test the extent to which the sources of these observed premiums are a product of higher search costs/informa...

Many subjects in lab experiments show considerable risk aversion in small-stakes gambles. This is counter to the predictions of expected utility theory for any reasonable degree of risk aversion (Rabin 2000) but is consistent with loss aversion in prospect theory. Benjamin, Brown, and Shapiro (forthcoming) show that math skills reduce small-stakes risk aversion, consistent with broader evidence...

A proposed model of information processing generates a prediction about the constrainedoptimal stochastic choice that is robust to details of the feasible information structures. A decision-maker processes payoff-relevant information until she reaches her cognitive constraint, at which point she either terminates the decision process and chooses an action, or restarts the process. By conditioni...

Title of dissertation: The Effect of Behavioral Biases on Supply Chain Decisions Anna Gloria Devlin, Doctor of Philosophy, 2014 Dissertation directed by: Wedad Elmaghraby Robert H. Smith School of Business Traditional work in operations management has focused on topics such as supply chain contracts and pricing, studying design of efficient contracts and optimal pricing policies. After these op...

We experimentally study behavior in an endogenous-timing herding game. We find that subjects respond to their type and to observed investment activity in a sensible way, but there are also substantial departures from Nash Equilibrium. Some departures can be viewed as mere noise in decision making while other departures represent systematic biases reflecting subjects’ failure to appreciate subtl...