Published Paper

We propose and axiomatize the Rank-Dependent Inequality-Averse  model. The model highlights an important linkage, Guilt Moderation, between different other-regarding behaviors: when choices are risky, decision maker feels less guilt by assigning  more weight to the fairer outcomes, creating a tendency to exhibit self-centered (or altruistic) behavior when outcomes are mixed with a fairer (or unfairer) outcome. Our model provides a unifying explanation for two seemingly distinct reversal behaviors in moral wiggle room and ex-ante fairness for you. Moreover, we characterize guilt moderation with the reversal behaviors and risk preference for others.  Lastly, the model sheds light on self-other risk attitudes gap and increased envy in wage transparency.

Working Paper

Recommendations play an undeniable role in decision-making. The empirical literature argues that recommendation can influence demand through two distinct channels: i) by enlarging awareness (attention channel), or ii) by altering preferences (utility channel). In this paper, we develop a framework to study these two channels using a parsimonious parametric model. We show that the model can produce various documented phenomena such as the Choice Effect, the Positive Effect of Negative Publicity, and the Spillover Effect. In addition, we offer simple and intuitive behavioral postulates characterizing our model so that one can test it. We offer unique identification under minimal data requirements. This enables us to measure the degree to which each channel affects choice behavior and to make out-of-sample predictions for counterfactual analysis for policy design purposes.  Lastly, we apply our model in an auction setting to determine which alternatives to be recommended.

We introduce an Attention Overload Model that captures the idea that alternatives compete for the decision maker’s attention, and hence the attention that each alternative receives decreases as the choice problem becomes larger. Using this non-parametric restriction on the random attention formation, we show that a fruitful revealed preference theory can be developed and provide testable implications on the observed choice behavior that can be used to (point or partially) identify the decision maker’s preference and attention frequency. We then enhance our attention overload model to accommodate heterogeneous preferences. Due to the nonparametric nature of our identifying assumption, we must discipline the amount of heterogeneity in the choice model: we propose the idea of List-based Attention Overload, where alternatives are presented to the decision makers as a list that correlates with both heterogeneous preferences and random attention. We show that preference and attention frequencies are (point or partially) identifiable under nonparametric assumptions on the list and attention formation mechanisms, even when the true underlying list is unknown to the researcher. Building on our identification results, for both preference and attention frequencies, we develop econometric methods for estimation and inference that are valid in settings with a large number of alternatives and choice problems, a distinctive feature of the economic environment we consider. We also provide a software package in R implementing our empirical methods, and illustrate them in a simulation study.

We propose and characterize the General Reciprocity Model in a framework of context-dependent choice. In the model, the second mover can establish their own rules or expectations regarding when or why to reciprocate. The model disentangles, while preserving, the unconditional baseline social preference from reciprocity: reciprocity occurs when people deviate from their baseline preference due to the context in which the first mover's choice is made. The revealed reciprocity result of the model coincides with the workhorse criterion to identify reciprocity in an experiment. Therefore, our model enables us to investigate the behavioral implication underlying this intuition. Moreover, we utilize the idea of Diminishing Sensitivity under Contextual Shrinkage to help identify reciprocity and baseline preference even when the ideal ``no context'' data are unavailable. Applications to several previous experiments on reciprocity are discussed for illustrating the identifications from the model.

Recent evidence suggests that non-isolation (a.k.a. integration) behavior can play a significant role in laboratory experiments that utilize the random problem selection (RPS) payment mechanism. Moreover, theoretical literature has also suggested the existence of social preferences violating state-wise monotonicity, a necessary and sufficient condition for incentive compatibility with the RPS payment mechanism, through preference reversals when mixing a choice probabilistically with an additional alternative. In a simple and parsimonious experiment with potential early resolution of payment uncertainty, we examine the joint occurrence of non-isolation and reversal behaviors by modifying the resolution timing of the RPS mechanism uncertainty. We find significant evidence for positive reversal behavior but no support for negative reversal behavior. In addition, the lower bound for the prevalence of non-isolation behavior is estimated to be 7.9%.

Work In Progress and Revising In process