Poverty and Aspirations Failure

This paper models the role of internal constraints in causing aspirations failure at the individual level. It shows how initial disadvantage increases the likelihood of binding internal constraints and hence aspirations failure, thus suggesting a new behavioral explanation for poverty traps. In examining common approaches to relaxing such internal constraints, it describe how an individual’s endogenous choice of a "cognitive window" (i.e. a set of relevant "similar" individuals)can limit the e¤ectiveness of role models. Further, we consider how the distribution of initial status determines the degree of connectedness in a society and hence the individual perception of these constraints. Our work provides a normative justification for programs that aim to empower participants through a direct positive shock to their aspirations.

Cascade atom in high-Q cavity: The spectrum for non-Markovian decay

The spontaneous emission spectrum for a three level cascade configuration atom in a single mode high-Q cavity coupled to a zero temperature reservoir of continuum external modes is determined from the atom-cavity mode master equation using the quantum regression theorem. Initially the atom is in its upper state and the cavity mode empty of photons. Following Glauber, the spectrum is defined via the response of a detector atom. Spectra are calculated for the detector located inside the cavity (case A), outside the cavity end mirror (Case B-end emission), or placed for emission out the side of the cavity (Case C). The spectra for case A and case B are found to be essentially the same. In all the cases the predicted lineshapes are free of instrumental effects and only due to cavity decay. Spectra are presented for intermediate and strong coupling regime situations (where both atomic transitions are resonant with the cavity frequency), for cases of non-zero cavity detuning, and for cases where the two atomic transition frequencies differ. The spectral features for Cases B(A) and C are qualitatively similar, with six spectral peaks for resonance cases and eight for detuned cases. These general features of the spectra can be understood via the dressed atom model. However, Case B and C spectra differ in detail, with the latter exhibiting a deep spectral hole at the cavity frequency due to quantum interference effects.Comment: 29 pages, 14 figures; v2: very minor correction to two equations, thicker lines in some figure

Behavioural decisions & welfare

If decision-makers (DMs) do not always do what is in their best interest, what do choices reveal about welfare? This paper shows how observed choices can reveal whether the DM is acting in her own best interest. We study a framework that relaxes rationality in a way that is common across a variety of seemingly disconnected positive behavioral models and admits the standard rational choice model as a special case. We model a behavioral DM (boundedly rational) who, in contrast to a standard DM (rational), does not fully internalize all the consequences of her own actions on herself. We provide an axiomatic characterization of choice correspondences consistent with behavioral and standard DMs, propose a choice experiment to infer the divergence between choice and welfare, state an existence result for incomplete preferences and show that the choices of behavioral DMs are, typically, sub-optimal

Self-confidence, overconfidence and prenatal testosterone exposure: evidence from the lab

This paper examines whether foetal testosterone exposure predicts the extent of confidence and over-confidence in own absolute ability in adulthood. To study this question, we elicited incentive-compatible measures of confidence and over-confidence in the lab and correlate them with measures of right hand 2D:4D, used as as a marker for the strength of prenatal testosterone exposure. We provide evidence that men with higher prenatal testosterone exposure (i.e., low 2D:4D ratio) are less likely to set unrealistically high expectations about their own performance. This in turn helps them to gain higher monetary rewards. Men exposed to low prenatal testosterone levels, instead, set unrealistically high expectations which results in self-defeating behavior

Behavioral Decisions and Policy

We study the public policy implications of a model in which agents do not fully internalize all the conscequences of their actions. Such a model uni es seemingly disconected models with behavioral agents. We evaluate the scope of paternalistic and libertarian-parternalistic policies in the light of our model, and propose an alternative type of approach, called soft-libertarian, which guides the decision makers in the internalization of all the conscequences of their ac- tions. Psychotherapy is one example of a soft-libertarian policy. Moreover, we show that in our behavioral framework, policies that increase the set of oppor- tunities or provide more information to the agent may not longer be individual welfare improving.Behavioral Decisions;Revealed Preferences;Normative Preferences;Paternalism;Soft-Libertarian;Autonomy;Psychotherapy

Decisions with Endogenous Frames (Replaces CentER DP 2010-21)

This paper contrasts the normative implications of a model of decision- making with endogenous frames to those of choice theoretic models of Bernheim and Rangel (2007, 2009) and Rubinstein and Salant (2008) in which observed choices are determined by exogenous frames or ancillary conditions. We argue that frames, though exogenous to the individual at the point when choices are made, matter for welfare purposes.Decisions;choice;frames;standard;behavioral;welfare

Characterizing behavioral decisions with choice data

This paper provides an axiomatic characterization of choices in a setting where a decision-maker may not fully internalize all the consequences of her choices on herself. Such a departure from rationality, it turns out, is common across a variety of positive behavioral models and admits the standard rational choice model as a special case. We show that choice data satisfying (a) Senís axioms if and fully characterize behavioral decisions, and (b) Senís axiom if and if fully characterize standard decision-making. In addition, we show that (a) it is possible to identify a minimal and a maximal set of psychological states using choice data alone, and (b) under specific choice scenarios, "revealed mistakes" can be inferred directly from choice data

Decisions with endogenous frames

We develop a model of decision-making with endogenous frames and contrast the normative implications of our model to those of choice theoretic models in which observed choices are determined by exogenous frames or ancillary conditions. We argue that, frames, though they may be taken as given by the decision-maker at the point when choices are made, matter for both welfare and policy purposes

Behavioural decisions & policy

We study the public policy implications of a model in which agents do not fully internalize all the conscequences of their actions. Such a model uni…es seemingly disconected models with behavioral agents. We evaluate the scope of paternalistic and libertarian-parternalistic policies in the light of our model, and propose an alternative type of approach, called soft-libertarian, which guides the decision makers in the internalization of all the conscequences of their actions. Psychotherapy is one example of a soft-libertarian policy. Moreover, we show that in our behavioral framework, policies that increase the set of opportunities or provide more information to the agent may not longer be individual welfare improving