Essays At The Intersection Of Behavioral Economics And Public Policy

Abstract

In political campaigns, candidates often avoid taking positions on issues, instead making vague statements that conceal the policy preferences that would guide them if elected. The explanation for ambiguity proposed in the first chapter is that voters do not understand the informational content of a nonannouncement. If voters are Bayesians, unraveling occurs, with only the most extreme candidates remaining ambiguous. However, if voters under-appreciate the relationship between candidates preferences and their strategies, more moderate candidates may also choose to be vague. The first chapter develops a model of candidate competition in which candidates can choose whether or not to announce their policy preferences to voters and applies Eyster and Rabin's (2005) concept of cursed equilibrium, which allows for varying degrees of understanding of the connection between type and strategy. The second chapter describes and analyzes the results of an experimental test in which subjects in the lab play an election game based on an extension of the model that allows candidates to choose whether or not to make policy commitments. While the majority of subjects make choices that are consistent with the Bayesian model, a substantial fraction shows varying levels of cursedness. The third chapter (joint work with Dan Benjamin, Ori Heffetz, and Miles Kimball) proposes foundations and a methodology for survey-based tracking of well-being. First, we develop a theory in which utility depends on "fun- damental aspects" of well-being, measurable with surveys. Second, drawing from psychologists, philosophers, and economists, we compile a comprehensive list of such aspects. Third, we demonstrate our proposed method for estimating the aspects' relative marginal utilities-a necessary input for constructing an individual-level well-being index-by asking 4,600 US survey respondents to state their preference between pairs of aspect bundles. We estimate high relative marginal utilities not only for happiness and life satisfaction, but also for aspects related to family, health, security, values, and freedoms.