We analyze the incentives for showing off, which we model as a costly signaling game, and study consequences of norms against such behavior. Prior to competing in contest, newcomer can signal his talent an incumbent. In equilibrium, ability occurs only when is exceptionally talented. situations benefits both contestants: obvious reasons; incumbent by economizing on wasted effort contest. Our re...

We derive a new cost of information in rational inattention problems, the neighborhood-based functions, starting from observation that many settings involve exogenous states with topological structure. These functions are uniformly posterior separable and capture notions perceptual distance. This second property ensures costs, unlike mutual information, make accurate predictions about behavior ...

This paper studies the large concentration of retirement behavior around statutory ages, a puzzling stylized fact. To investigate this fact, I estimate bunching responses to 644 pension benefit discontinuities, using administrative data on universe German retirees. Financial incentives alone cannot explain patterns, but there is direct effect ages. argue that framing ages as reference points fo...

Mistakes and overconfidence in detecting lies could help spread. Participants our experiments observe videos which senders either tell the truth or lie, are incentivized to distinguish between them. We find that participants fail detect lies, but overconfident about their ability do so. use these findings study determinants of sharing its effect on lie detection, finding even when share truthfu...

We examine methods for evaluating interventions designed to improve decision-making quality when people misunderstand the consequences of their choices. In an experiment involving financial education, conventional outcome metrics (financial literacy and directional behavioral responses) imply that two are equally beneficial even though only one reduces average severity errors. trace these failu...

We quantify reference dependence and loss aversion in the housing market using rich Danish administrative data. Our structural model includes aversion, dependence, financial constraints, a sale decision, matches key nonparametric moments, including “hockey stick” listing prices with nominal gains, bunching at zero realized gains. Households derive substantial utility from gains over original ho...

Subjective beliefs are crucial for economic inference, yet behavior can challenge the elicitation. We propose that belief elicitation should be incentive compatible not only theoretically but also in a de facto behavioral sense. To demonstrate, we show binarized scoring rule, state-of-the-art elicitation, violates two weak conditions compatibility: (i) within information on incentives increases...

We study subgame-perfect implementation (SPI) mechanisms that have been proposed as a solution to incomplete contracting problems. show these mechanisms, which are based on off-equilibrium arbitration clauses impose large fines for lying and the inappropriate use of arbitration, severe behavioral constraints because induce retaliation against legitimate uses arbitration. Incorporating reciproci...

We investigate how the salience of an ethnic minority affects majority group’s voting behavior. use increased Muslim communities during Ramadan as a natural experiment. Exploiting exogenous variation in distance election dates to over 1980–2013 period Germany, our findings reveal polarization. Vote shares for both right- and left-wing extremist parties increase municipalities with mosques when ...