Shame, Guilt, and Motivated Self-Confidence
with Roberta Dessí (TSE) and Xiaojian Zhao (Monash)
Reject and Resubmit at Journal of the European Economic Association
Evidence from anthropology, economics, and psychology indicates that sensitivities to shame and guilt vary substantially across cultures, as does confidence in ability and skills. Is there a connection between these observations? We address this question both theoretically and empirically. Theoretically, we endogenize sensitivities to shame and guilt as well as self-confidence, studying their equilibrium emergence and interactions. Empirically, we find significant evidence of a negative relationship between individual self-confidence and the cultural importance of shame relative to guilt. This relationship holds both across countries and among U.S. immigrants relative to their cultures of origin, exhibiting a long-lasting effect that persists after migration.
Attention Spillover by Multiple Tasks
with Lorenz Goette (NUS)
[Abstract]
Do people correctly perceive the limitation of their attention when dealing with multiple tasks? We develop a simple model that predicts that, under rational inattention, individuals can correctly perceive their attention on a future task and possible attention spillover in a dual-task setting. We test our theoretical predictions in an online experiment and find that individuals generally overestimate their future attention to a scheduled, incentivized task, and thus report exaggerated valuation of the task. We also document that dual tasks have positive spillover effects on each other, improving baseline attention level for task completion, and people can indeed anticipate such positive spillover effects.
Valuing Reminders in Attention Management
with Lorenz Goette (NUS)
[Abstract]
Do people value their attention optimally? Existing findings suggest that individuals systematically undervalue by how much attention-increasing technologies, in particular reminders, can boost their chance of completing future tasks. In a theory-driven experiment, we revisit this question and elicit a measure of individuals' valuation of reminders that is free from arbitrary risk preferences, under an incentive scheme of accumulating probability points to win a binary lottery. We find that even under such incentive structure, individuals still do not fully value the effectiveness of reminders. The violation of optimality cannot be explained by potential probability weighting.
Trading around the Clock: How Online Opinions Shape Investor Trading Behavior
with Jia Wu (SYSU) and Lin Huang (SWUFE)
[Abstract]
This study examines whether online opinions expressed during trading versus non-trading hours have differential impacts on stock prices, exploiting the segmentation between individual and institutional investors. Using opinion data from a popular Chinese online stock forum, we find that non-trading-hour opinions generate positive concurrent overnight returns but are followed by reversals in the subsequent daytime trading periods, while trading-hour opinions show no such pattern. This reflects a systematic tug-of-war between individual investors who predominantly trade overnight and institutional investors who tend to trade intraday. We show that firms' release of operational events after market close creates distinct information environments that particularly influence individual investors who trade overnight. Such event announcements expose inexperienced individual investors to high uncertainty, leading them to seek advice through online forums and trade near market open. We also find that non-trading-hour opinions attract substantial investor attention when companies announce these events.
