We study a simple savings scheme that allows workers to defer receipt of part their wages for three months at zero interest. The significantly increases during the deferral period, leading higher postdisbursement spending on lumpy goods. Two years later, after two additional rounds scheme, we find treated have made permanent improvements homes. popularity implies lack good alternative options. ...

This paper is concerned with learning decision-makers’ preferences using data on observed choices from a finite set of risky alternatives. We propose discrete choice model unobserved heterogeneity in consideration sets and standard risk aversion. obtain sufficient conditions for the model’s semi-nonparametric point identification, including cases where depends some exogenous variables. Our meth...

We study two-player games where one-sided asymmetric information can lead to either adverse or advantageous selection. contrast behavior in these with settings both players are uninformed. find stark differences, suggesting that subjects do account for endogenous selection effects. Removing strategic uncertainty increases the fraction of who Subjects respond more than Using additional treatment...

Moral behavior is more prevalent when individuals cannot easily distort their beliefs self-servingly. Do seek to limit or enable ability beliefs? How do these choices affect behavior? Experiments with over 9,000 participants show preferences are heterogeneous—30 percent of prefer belief distortion, while 40 it, even if costly. A random assignment mechanism reveals that being assigned the prefer...

Risk and time are intertwined. The present is known while the future is inherently risky. This is problematic when studying time preferences since uncontrolled risk can generate apparently present-biased behavior. We systematically manipulate risk in an intertemporal choice experiment. Discounted expected utility performs well with risk, but when certainty is added common ratio predictions fail...

This paper examines how investments in health, through spending on preventive care, affect subsequent spending on medical care among the retired population. Augmenting a traditional dynamic consumption-savings model with two medical care goods, I estimate a structural life cycle model using data on single retired Americans from the Health and Retirement Study; I then conduct policy counterfactu...

I simulate a life-cycle model with preferences described by a utility function à la Gul and Pesendorfer (2001). I show that temptation to consume contributes to explain the saving, retirement consumption, and asset allocation puzzles. I perform two analyses, excluding or including Social Security protection, separately for the US and Italy. The pension replacement rate is endogenous in the mode...

We analyze an exchange economy of unsecured credit where borrowers have the option to declare bankruptcy in which case they are temporarily excluded from financial markets. Endogenous credit limits are imposed that are just tight enough to prevent default. Economies with temporary exclusion differ from their permanent exclusion counterparts in two important properties. If households are extreme...

Rational junk-food consumption is analyzed within an expected lifetime utility maximizing framework in which longevity and productivity rise with health, and health deteriorates with junk-food consumption. As long as the junk food’s relative taste-price differential is positive, the consumer’s rational diet deviates from the physiologically optimal one and generates lower than maximal levels of...

The delay effect, that people discount the near future more than the distant future, has not been verified rigorously. An experiment conducted by us in China confirms that, by separating the delay from the interval, the delay effect exists only within a short delay. The results are reliable, because the rewards paid were very large, in order to elicit the subjects’ true preferences. The interva...