infonet-economy

In recent years, much has been learned about the representation of subjective value in simple, nonstrategic choices. However, a large fraction of our daily decisions are embedded in social interactions in which value guided decisions require balancing benefits for self against consequences imposed by others in response to our choices. Yet, despite their ubiquity, much less is known...

People make numerous decisions every day including perceptual decisions such as walking through a crowd, decisions over primary rewards such as what to eat, and social decisions that require balancing own and others' benefits. The unifying principles behind choices in various domains are, however, still not well understood. Mathematical models that describe choice behavior in...

The negative symptoms of schizophrenia have been associated with altered neural activity during both reward processing and cognitive processing. Even though increasing evidence suggests a strong interaction between these two domains, it has not been studied in relation to negative symptoms. To elucidate neural mechanisms of the reward-cognition interaction, we applied a letter...

Optimal behavior requires striking a balance between exploiting tried-and-true options or exploring new possibilities. Neuroimaging studies have identified different brain regions in humans where neural activity is correlated with exploratory or exploitative behavior, but it is unclear whether this activity directly implements these choices or simply reflects a byproduct of the...

We provide evidence that unemployment insurance affects equilibrium conditions in the labor market, which creates significant "market externalities." We provide a framework for identification of such equilibrium effects and implement it using the Regional Extension Benefit Program (REBP) in Austria which extended the duration of UI benefits for a large group of eligible...

Until the late 1980s, textbooks portrayed economics as a nonexperimental science because it was thought that “Economists…cannot perform the controlled experiments of chemists or biologists.…Like astronomers or meteorologists, they generally must be content largely to observe” (1). Since then, economics has experienced an experimental revolution (2–6). However, there has been a debate...

We study the economic effects of religious practices in the context of the observance of Ramadan fasting, one of the central tenets of Islam. To establish causality, we exploit variation in the length of daily fasting due to the interaction between the rotating Islamic calendar and a country’s latitude. We report two key, quantitatively meaningful results: (i) longer Ramadan fasting...

Contingent sovereign debt can create important welfare gains. Nonetheless, there is almost no issuance today. Using hand-collected archival data, we examine the first known case of large-scale use of state-contingent sovereign debt in history. Philip II of Spain entered into hundreds of contracts whose value and due date depended on verifiable, exogenous events such as the arrival of...