We propose a model of individual decision making that separates a central executive system (“Ego”) from a sub-self with long-term preferences (“Cold”) and an impulsive sub-self (“Hot”). Ego cares only about the payoffs of the other two subselves and allocates available resources...

How does public information on asset payoffs affect private information acquisition and aggregated market information? In turn, how do private information and market information affect asset price volatility and liquidity? What are the roles of information costs and market competitivity? To...

Environment, social and governance (ESG) policies have become important to many investors. We model the interaction between ESG policy proposals and shareholder trading and voting under different sets of preferences, and we test the predictions of our model in a laboratory experiment. In a first...

How does trader overconfidence (judgemental or self-enhancement) affect their performance in asset markets, and overall market quality? Conversely, how does market participation affect traders’ overconfidence? To address such questions, we build a laboratory asset market in which human...

We propose a simple adaptive learning model to study behavior in the call market. The laboratory environment features buyers and sellers who receive a new random value or cost in each period, so they must learn a strategy that maps these random draws into bids or asks. We focus on buyers'...