A Model of Mental Effort and Endogenous Estimation Risk

I present a simple model that formalizes Kahneman's (1973) ideas and experimental work on attention limitations. In addition, I extend his framework to account for the interaction between attention and memory deficits. In particular, I propose that individuals optimally allocate their divisible, but limited, attention to estimate parameters of an economic model, by retrieving observations from a stock of memories, by means of a cognition technology. I speculate that the model might help explain several stylized facts that are at odds with an infinite capacity (fully rational) model.

Portfolio Selection with Endogenous Estimation Risk

I explore how investors allocate mental effort to learn about the mean return of a number of assets and I analyze how this allocation changes the portfolio selection problem. I show that the endogeneity of estimation risk alters the comparative statics of portfolio choice and provides an explanation to Huberman's (2001) empirical findings that “Familiarity Breeds Investmentâ€.

Central bank´s value at risk and financial crises: An application to the 2001 Argentine crisis

Blejer and Schumacher (1999) were the first to suggest that Central Bank’s Value at Risk (VaR), a widely used composite measure of potential portfolio losses in the corporate sector, could be used as an early warning indicator of financial crises. We extend their research in two aspects. First, we develop an operational model to calculate Central Bank’s VaR and illustrate the methodology using data from the recent financial crisis in Argentina. Second, we compare the predictive performance of diverse measures based on the VaR approach to that of another well known early warning system, the signals approach, and several univariate leading indicators. The results reveal a strong relationship between the measures proposed and the crisis. Furthermore, one of the measures provides higher accuracy and announces the probability of a crisis sooner than the competing indicators.currency crises, Argentina, value at risk

Properties of the Social Discount Rate in a Benthamite Framework with Heterogeneous Degrees of Impatience

This paper derives the properties of the discount rate that should be applied to a public-sector project when the affected population has heterogeneous degrees of impatience. We show that, for any distribution of discount rates, the social discount rate has the following properties: it decreases over time, it is lower than the average of the discount rates in the population, and it converges to the discount rate of the most patient individual in the economy. These properties hold for both constant and decreasing individual discount rates. Finally, we evaluate how changes in the distribution of individual discount rates affect the social discount rate.social discount rate; hyperbolic discounting; cost-benefit analysis

On Multivariate Prudence

In this paper we extend the theory of precautionary saving to the case in which uncertainty is multidimensional and we develop a matrix-measure of multivariate prudence. Furthermore, we characterize comparative prudence, decreasing and increasing prudence, the effect of uncertainty on the marginal propensity to consume out of wealth, and the Drèze-Modigliani substitution effect in this multivariate setting. We also characterize the concept of multivariate downside risk aversion as a multivariate preference for harm disaggregation. We show that our definition is equivalent to a positive precautionary saving motive. We propose an alternative measure of the intensity of downside risk aversion and show that this measure is useful in understanding several economic problems that involve multivariate preferences.matrix-measure, multivariate prudence, comparative prudence, multivariate downside risk aversion, downside risk aversion, multivariate preferences

Effectiveness of the Flipped Classroom in Health Sciences University Programs: A Literature Review

Introduction: Higher education institutions have implemented active learning approaches, such as the Flipped Classroom, to promote the education of their students. Nevertheless, there is conflicting evidence regarding the benefits derived from its implementation. Objective: To determine the effectiveness of the Flipped Classroom application in the education of university students from Health Sciences undergraduate programs. Materials and methods: A systematized narrative review of the literature published between 2012 and 2022. Pubmed, SciELo, Scopus y Web of Science were used as sources of primary articles. A revised version of the Kirkpatrick model was used to assess the effectiveness of the Flipped Classroom. Results: 34 out of the 1020 retrieved articles reached the quantitative synthesis phase. Students value positively this didactic model and acknowledge its contributions in the development of attitudes, knowledge and skills. In contrast, some studies show an increase in the workload and stress levels of students. Conclusions: The evidence suggests that Flipped Classroom is a valid didactic model for the education of Health Sciences students. Future studies should consider the effectiveness of its implementation at a long term organizational level

The Biasing Effects of Memory Distortions on the Process of Legal Decision-Making

This article investigates the impact of memory limitations and memory distortions on the process of legal decision-making. I develop a simple framework in which jurors establish interim judgments, which are later used by a memory technology to reconstruct, in an inductive process, evidence related to those judgments. The resulting behavior matches a number of stylized facts that are inconsistent with the standard Bayesian framework. I show that beliefs in a given hypothesis may remain unchanged, and may even be strengthened, in the face of disconfirming evidence. This, in turn, implies that the beliefs of two jurors with different memory technologies may deviate further apart as they receive new information, accounting for heterogeneous, i.e. opposite verdict choices, and strongly held beliefs after a large amount of information is presented. Finally, I show that in this setup the probability of legal errors is highest for moderate strengths of evidence.

Industrial fatigue Redux

This paper presents a gift-exchange labor market model in which workers are prone to exhaustion. Although norms of reciprocity and fairness indicate that firms and workers must exchange 'gifts' in the form of higher wages and higher effort respectively, these incentives are mitigated by the evolution of fatigue and, therefore, the dynamic efficiency wage is lower than its static counterpart.