Foundations of Intrinsic Habit Formation 

Econometrica, 78(4):1341-1373, July 2010

[download the online appendix]  

Do habit formation models have testable implications? This paper provides axiomatic foundations for a nested family of habit formation models. The axiomatization introduces an intertemporal theory of weaning a decision-maker from her habits using the device of compensation. I clarify differences across specifications of the model, provide measures of habit-forming tendencies, and suggest methods for axiomatizing other time-nonseparable preferences.

Competing for Consumer Inattention

Coauthored with Geoffroy de Clippel and Kfir Eliaz

Journal of Political Economy, 122(6):1203-1234, December 2014 (lead article)

How do markets respond when consumers are able to examine only a limited number of markets for the best price? A firm’s price can deflect or draw attention to its market, and consequently, limited attention introduces a new dimension of cross-market competition. We characterize the equilibrium of a stylized model capturing these features, and show that having consumers who are only partially attentive increases consumer welfare. With less attention, consumers are more likely to miss the best offers; but enhanced cross-market competition decreases average price paid, as leading firms try to stay under the consumers’ radar. 

Conflict Leads to Cooperation in Demand Bargaining

Journal of Economic Behavior & Organization, 87:35-42, March 2013

[download a related article I wrote for VoxEU] 

I consider a multilateral demand game in which myopic players come to the bargaining table with requests for both coalition partners and a potentially generated resource. Highlighting group dynamics, we show how the myopic actions of players may lead to the break up of groups in the short run, but can ultimately bring about a situation from which a strictly self-enforcing allocation can be reached. 

Wasteful Sanctions, Underperformance and Endogenous Supervision

Coauthored with David Miller

American Economic Journal: Microeconomics, 6(4):326-361, November 2014 


What do optimal contracts look like in teams where agents have many opportunities to shirk, tasks can be stochastically infeasible, and incentives are provided informally, using wasteful sanctions like guilt and shame, or slowed promotion? These features give rise to optimal contracts with underperformance, forgiving sanctioning schemes, and endogenous supervision structures. Agents optimally take on more assigned tasks than they intend to complete, leading to the concentration of supervisory responsibility in the hands of one or two agents. This arises for statistical reasons, despite the symmetry of players and tasks.

History-Dependent Risk Attitude

Coauthored with David Dillenberger

Journal of Economic Theory, 157:445-477, May 2015

We allow a decision maker’s risk attitute to be affected by his history of disappointments and elations. The decision maker classifies realizations of compound risks as disappointing or elating using a threshold rule. We establish equivalence between the model and two cognitive biases: risk attitude is reinforced by experience (there is greater risk aversion after disappointment than elation) and there is a primacy effect (early outcomes have the greatest impact). 

Rationalizing Choice with Multi-Self Models

Coauthored with Attila Ambrus

Economic Journal, 125:1136-1156, June 2015


Do models where multiple selves or individuals are aggregated into a collective decision have testable implications? Our negative result holds for a large class of models, even when the researcher has a fully specified theory of how preferences are aggregated. We establish the result by finding a linear relationship between the number of selves and the set of choice functions that a given model is guaranteed to rationalize with a given number of selves. The latter set is connected to the number of IIA violations implied by the choice function, a new measure of irrationality that we propose.

Optimism and Pessimism with Expected Utility 
Coauthored with David Dillenberger and Andrew Postlewaite

Journal of the European Economic Association, 15(5), October 2017


This paper shows that Savage’s axioms admit a continuum of other “expected utility” representations in which the probability distributions over states capture forms of pessimism or optimism. When the DM’s choice domain includes both subjective acts and objective lotteries, we explain how optimism, pessimism, and standard Savage agents can be distinguished.