Showing 1-20 of 57 items.

Individual Preferences, Monetary Gambles, and Stock Market Participation: A Case for Narrow Framing

By Nicholas Barberis, Ming Huang, and Richard H. Thaler

American Economic Review, September 2006

We argue that “narrow framing,” whereby an agent who is offered a new gamble evaluates that gamble in isolation, may be a more important feature of decisionmaking than previously realized. Our starting point is the evidence that people are often aver...

Annuitization Puzzles

[Symposium: After Retirement]

By Shlomo Benartzi, Alessandro Previtero, and Richard H. Thaler

Journal of Economic Perspectives, Fall 2011

In his Nobel Prize acceptance speech given in 1985, Franco Modigliani drew attention to the "annuitization puzzle": that annuity contracts, other than pensions through group insurance, are extremely rare. Rational choice theory predicts that households w...

Anomalies: Preference Reversals

By Amos Tversky and Richard H. Thaler

Journal of Economic Perspectives, Spring 1990

The preference reversal phenomenon has been established in numerous studies during the last two decades, but its causes have only recently been uncovered. This phenomenon, or cluster of phenomena, challenges the traditional assumption that the decisionmak...

The Nominal Share Price Puzzle

By William C. Weld, Roni Michaely, Richard H. Thaler, and Shlomo Benartzi

Journal of Economic Perspectives, Spring 2009

The average nominal share prices of common stocks traded on the New York Stock Exchange have remained constant at approximately $35 per share since the Great Depression as a result of stock splits. It is surprising that U.S. firms actively maintained cons...

Anomalies: The Winner's Curse

By Richard H. Thaler

Journal of Economic Perspectives, Winter 1988

Next time that you find yourself a little short of cash for lunch, try the following experiment in your class. Take a jar and fill it with coins, noting the total value of the coins. Now auction off the jar to your class (offering to pay the winning bidde...

Helping Consumers Know Themselves

By Emir Kamenica, Sendhil Mullainathan, and Richard Thaler

American Economic Review, May 2011

Firms sometimes know more about a consumer's expected usage than the consumer herself. We explore the consequences of this reversal in the information asymmetry. We analyze the consequences of making consumers more informed about themselves. While making ...

Heuristics and Biases in Retirement Savings Behavior

[Symposium: The Adequacy of Retirement Saving]

By Shlomo Benartzi and Richard Thaler

Journal of Economic Perspectives, Summer 2007

Standard economic theories of saving implicitly assume that households have the cognitive ability to solve the relevant optimization problem and the willpower to execute the optimal plan. Both of the implicit assumptions are suspect. Even among economists...