I am a Behavioral Economist, focusing on questions in Quantitative Marketing, Industrial Organization, and Public Economics. My main research focus is on the behavioral economics of firms: How should firms account for behavioral consumers? How do firms respond in practice? Are firms sometimes behavioral too?
I obtained my PhD in Economics from the University of California, Berkeley.
Meetings
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Research
More than a Penny's Worth: Left-Digit Bias and Firm Pricing
The Review of Economic Studies Volume 90, Issue 5, October 2023, Pages 2612–2645 (Featured article)
[2019 version here, similar results - different data]
Firms arguably price at 99-ending prices because of left-digit bias—the tendency of consumers to perceive a $4.99 as much lower than a $5.00. Analysis of retail scanner data on 3500 products sold by 25 US chains provides robust support for this explanation. I structurally estimate the magnitude of left-digit bias and find that consumers respond to a 1-cent increase from a 99-ending price as if it were more than a 20-cent increase. Next, I solve a portable model of optimal pricing given left-digit biased demand. I use this model and other pricing procedures to estimate the level of left-digit bias retailers perceive when making their pricing decisions. While all retailers respond to left-digit bias by using 99-ending prices, their behavior is consistently at odds with the demand they face. Firms price as if the bias were much smaller than it is, and their pricing is more consistent with heuristics and rule-of-thumb than with optimization given the structure of demand. I calculate that retailers forgo 1 to 4 percent of potential gross profits due to this coarse response to left-digit bias.
Sophisticated Consumers with Inertia: Long-Term Implications from a Large Scale Field Experiment (with Klaus Miller and Navdeep Sahni)
Conditional Accept at The American Economic Review
[FINAL version - May 2026]
[media: The Economist]
Are consumers aware of their future inertia? We run a field experiment that offers over a million readers of a European newspaper auto-renewing or auto-canceling contracts. Many consumers are inert yet most anticipate and account for their inertia: though offering auto-renewing contracts benefits the firm in the short-term, it lowers subscriptions take-up by 35% and total subscribers by 23% over 20 months. Inertia's impact on market outcomes depends on consumers' overall awareness of it, which is often ignored by the literature, firms, and policy makers. In our context, consumer sophistication limits the firm from exploiting their behavioral limitations.
We investigate how the choice architecture used during data collection influences the quality of collected data, including volume (how many people share) and representativeness (who shares data). To this end, we run a large-scale choice experiment to elicit consumers’ valuation for their Facebook data while randomizing two common choice frames: default and price anchor. An opt-out default decreases valuations by 14% compared to opt-in, while a $0–50 price anchor decreases valuations by 53% compared to a $50–100 anchor. Moreover, in some consumer segments, the susceptibility to frame influence negatively correlates with consumers’ average valuation. As a result, conventional frame optimization practices that aim to maximize data volume may often result in less representative data. We demonstrate the magnitude of this volume-bias trade-off in our data and argue that it should be a key decision factor in choice architecture design.
Learning and Limitations of Heuristic Pricing: Evidence from a Reform
Conditional Accept at Journal of Marketing Research
[UPDATED! October 2026] replaces "Firms have partial learning"
[Media: BFI Research Brief]
Pricing is a core firm activity, yet it is unclear how firms set prices. Do they maximize a demand model, or satisfice and follow heuristics held to a good-enough standard? The two are hard to separate, because a rule of thumb can often be relabeled as optimization net of the cost of doing better. An Israeli reform separates them: it banned prices ending in non-existent denominations (like .99), forcing supermarkets to re-price. Within a class of left-digit-bias demand models---downward sloping, with discontinuities at round numbers---a firm optimizing even under parameter uncertainty would move to the next-best ending, .90, and avoid the dominated .00. Instead, about 20\% of prices moved to .00. Which prices moved there was idiosyncratic, and the move reversed to .90 only over the following year, paced by the shortfall each firm could detect against its own past sales. Demand itself was economically stable across the reform on several tests. The evidence favors firms that knew .99 worked without having a model that ranked unfamiliar endings. Forced exploration eventually brought profits closer to optimum than they were pre-reform. Thus, heuristics can bring firms close to the optimum, but they require learning what is possible and can be fragile when conditions change.
We report the results of an online experiment studying preferences for giving and preferences for group-wide redistribution in small (4-person) and large (200-person) groups. We find that the desire to engage in voluntary giving decreases significantly with (perceived) group size. However, voting for group-wide redistribution is precisely estimated to not depend on group size. Moreover, people’s perceptions of what constitutes the relevant group are malleable, and affect their desire to give. These results suggest that government programs, such as progressive tax-and-transfer systems, can help satisfy other-regarding preferences for redistribution in a way that creating opportunities for voluntary giving cannot.
Impacts of Home-Care Subsidies: Evidence from Quasi-Random Assignment (with Yuval Ofek-Shanny and Dan Zeltzer)
The Journal of Public Economics Vol 248, August 2025
[Media: BFI Research Brief]
We study the impact of subsidizing home-based long-term care on recipients' health and the labor supply of their working-age children. We use administrative data from Israel on the universe of welfare benefit applications linked with tax records of applicants and their adult children. To address the endogeneity of benefit recipients' health status, we instrument for benefit receipt using the leniency of randomly assigned evaluators who assess the applicant's functional status and determine benefit eligibility. We find that for compliers---applicants who receive subsidies only from more lenient evaluators---subsidizing home-based care has large adverse effects on recipient health (+5.2 p.p. one-year mortality, 95% CI: 1.5 to 8.9 p.p.) but no detectable effects on their children's labor market outcomes (child labor market participation: -0.5 p.p., 95% CI: -5.2 to +4.2 p.p.; child income: -5.5 log points, 95% CI: -46 to +35 log points). The results are consistent with the crowd-out of self-care for the marginal recipient, highlighting the need to assess the heterogeneous effects of home-care subsidies.
Goals, Expectations, and Performance (with Alex Wellsjo)
Management Science, August 2026
[UPDATED! January 2026]
[Media: BFI Research Brief]
People and organizations often set goals to self-motivate and achieve better outcomes in challenging tasks. But goals, and their effectiveness, might depend on what people expect to happen. Do goals reflect expectations or do goals set expectations? How do goals and expectations affect performance? These distinctions are important for motivation and intervention design. We run an online real-effort task to answer these two questions by introducing exogenous variation in goals and expectations.
First, we find that goals mostly reflect existing expectations rather than set expectations. Second, practicing an easier version of a task leads to higher expectations and higher performance. Third, eliciting a goal also leads to higher average performance, and changing the goal level has local effects that pull people toward the goal. However, revising goals has little effect on average performance.
Our findings imply that increasing expectations is an important motivating tool that increases goals and performance. Having any goal helps performance; however, people cannot fool themselves into expecting and doing more simply by choosing a different goal.
Work in Progress
The Dynamics of Following Defaults (with Rawley Heimer)
Behavioral Responses to GST and Firm Pricing (with Josh Dean)
Loss-Leader Pricing: Empirical Evidence from Gas Stations (with Hung Ho and Andreas Kraft)
Associate Professor of Marketing
University of Chicago
Booth School of Business
