The job market signaling model in Spence~(1973) deals with a situation of asymmetric information. Workers vary in their productivity. A worker is privately informed of his productivity but the firms are not informed. Spence~(1973) shows that in competitive markets, costly education may signal...

In an effort to address persistent consumer privacy concerns, policy makers and the data industry seem to have found common grounds in proposals that aim at making online privacy more “transparent.” Such self-regulatory approaches rely on, among other things, providing more and better...

We derive closed-form strategies for a broker who provides liquidity to an informed trader and to a noise trader over a finite-time and infinite-time trading horizon. The flow of the noise trader is uninformative and the broker trades with the noise trader at a profit, on average. On the other...

I empirically study how confirmatory bias works for strong and contradictory signals using sell-side analysts’ data. I first model an agent who is prone to confirmatory bias and whose task is to value a stock based on a signal, and then introduce the effects of signal strength by relaxing...

Mean-preserving contractions are critical for studying Bayesian models of information design. We introduce the class of bi-pooling policies, and the class of bi-pooling distributions as their induced distributions over posteriors. We show that every extreme point in the set of all...

How does the increasing publicness of decisions (due, e.g., to social media) affect the total costs of social signaling distortions? While pervasive signaling may induce pervasive distortions, it may also permit people to signal while distorting each choice to a smaller degree. Ironically, for a...

A set of voters consults experts before voting over two alternatives. Experts observe private signals about the values of the alternatives and can reveal their information or conceal it, but cannot lie. We examine how disclosure and voting vary with preference biases, signal precision, and the...

This article analyses belief updating when agents receive a signal that restricts the number of possible states of the world. We create an experiment on individual choice under uncertainty. In this experiment, the subject observes an urn, containing yellow and blue balls, whose composition is...