Matthew Nagler (City College)

April 18, 2018 @ 1:30 pm – 3:00 pm
Hunter West 1537 (Economics Dept. Seminar Room)
912 Lexington Ave
New York, NY 10065
Karna Basu

Matthew Nagler is a Professor of Economics at The City College of New York and The Graduate Center, CUNY.

Title:Choosing and Adjusting

Abstract: The paper develops a model of individual decision-making in which cognitive adjustment complements choice of action. Because adjustment is durable, initial positions in consumption (“endowments”) matter for future consumption decisions. Thus the theory provides a unified foundation in primitives for the endowment effect, behaviors traditionally attributed to sunk-cost bias, and the effectiveness of marketing practices. Demonstrations of cognitive dissonance in the literature fit a pattern of adjustment effects predicted in the model based on restriction of the individual’s choice set. Natural experiments that similarly leverage choice-restricting events could allow identification of endowment effects and other adjustment phenomena in the market.