Joint vs. individual performance in a dynamic choice problem

This paper compares the relative ability of individuals and pairs to solve a finite, stochastic lifecycle problem that requires borrowing and saving to achieve the rational benchmark. We find that pairs significantly outperform individuals, especially when allowing subjects to account for past mistakes along conditionally-optimal consumption paths. Joint decision-makers out-earn individuals by about 23%. Though pairs and individuals both overreact to income and wealth balances, these distortions are twice as large for individuals. Analyzing chat data reveals that pairs bargain to balance idiosyncratic consumption preferences, which reduces consumption errors. We estimate consumption heuristics at the observation level and study their dynamics. We show that about half our subjects (or pairs of subjects) stick to heuristics for the majority of the experiment. These ‘stable’ subjects significantly outperform their ‘unstable’ counterparts in the dynamic optimization task. Finally, we provide suggestive evidence that subjects who have a nuanced view of debt outperform subjects who think of debt as always bad, even after controlling for cognitive ability

Three Essays on Central Banking

This dissertation comprises three chapters focused on the conduct of monetary policy. Specifically, I use a blend of empirical and experimental research methods study unconventional monetary policy alternatives, to quantify the effect of information flow on markets, and to examine the efficacy of emergent changes in central bank communication. Chapter one of this dissertation introduces an experimental framework that serves as a test-bed for both monetary and fiscal policies. This framework allows policymakers and academics to generate data regarding the efficacy of policy alternatives in a relatively low-cost, safe, and controlled environment. To validate this experimental framework, we explore two policy alternatives in a constrained policy environment: allowing a central bank to use negative nominal interest rates and permanently increasing the inflation target. Our findings indicate that negative interest rates can effectively stimulate demand, consistently. closing an output and employment gaps. However, permanently increasing an inflation target cannot. Chapters two and three of this dissertation focus on central bank communication. Chapter two uses a high-frequency identification approach to quantify the effect of information flow on financial markets in the United Kingdom. Specifically, we study whether and how the U.K.’s yield curve responds to communication from the Bank of England (BoE) about the forecast uncertainty and balance of risks surrounding both inflation and output growth. We find that yields respond at least as strongly to this higher-order information as they do to information about the BoE’s expected paths for inflation and output growth. Chapter three describes an experiment in which we study how uncertainty in central bank communication influences individual expectations formation and individual forecast uncertainty. We find that reducing the precision of central bank communication by including uncertainty can reduce the coordinating power of projections and increase individual-level uncertainty

Brief report Attachment orientations, marriage, and the transition to parenthood

Abstract This study examined how a major life stressor-the transition to parenthood-impacts marital satisfaction and functioning in persons with different romantic attachment orientations. As hypothesized, if highly ambivalent women entered the transition perceiving low levels of spousal support, they experienced significant declines (pre-to-postnatal changes) in perceptions of spousal support and marital satisfaction, and their husbands reported significant declines in support giving and marital satisfaction. Changes in both spousesÕ satisfaction were mediated by preto-postnatal changes in wivesÕ perceptions of spousal support. That is, highly ambivalent women who perceived less prenatal support reported significant declines in perceived support over time, which in turn predicted significant declines in their marital satisfaction. These results highlight the critical role that perceptions of support assume when highly ambivalent women encounter a major life stressor

The early childhood generalized trust belief scale

The study was designed to develop and evaluate the Early Childhood Generalized Trust Belief Scale (ECGTBS) as a method of assessing 5-to-8-year-olds’ generalized trust. Two hundred and eleven (103 male and 108 female) children (mean age 6 years and 2 months at Time 1) completed the ECGTBS twice over a year. A subsample of participants completed the ECGTBS after two weeks to assess the scale’s test-retest reliability. Exploratory and confirmatory factor analyses confirmed that the ECGTBS assessed the expected three factors: reliability, emotional trust, and honesty with item-pairs loading most strongly on their corresponding factor. However, the ECGTBS demonstrated low to modest internal consistency and test-retest reliability which indicates a need for further development of this instrument. As evidence for the convergent validity of the ECGTBS, the reliability and emotional trust items were associated with the children’s trust in classmates at Time 2. Concurrent asymmetric quadratic relationships indicated the importance of midrange generalized trust. Specifically, children with very high generalized trust experienced greater loneliness and children with very low generalized trust had fewer friendships than children with midrange trust