We investigate whether older people correctly perceive their cognitive decline and the potential financial consequences of misperception. First, we show that older people tend to underestimate their cognitive decline. We then show that those experiencing a severe decline but unaware of it are more likely to suffer wealth losses. These losses largely reflect decreases in financial wealth and are mainly experienced by wealthier people who were previously active on the stock market. Our findings support the view that financial losses among older people unaware of their cognitive decline are the result of bad financial decisions, not of rational disinvestment strategies.

This article studies the effect of team gender composition and leadership on women’s influence in two field experiments. Study 1 finds that male-majority teams accord disproportionately less influence to women and are less likely to choose women to represent the team externally. We replicate this finding in a new context, where we also vary the gender of an assigned team leader. We find that a female leader substantially increases women’s influence, even in male-majority teams. With a model of discriminatory voting, we show that either increasing women's share or assigning a female leader decreases the penalty women face by more than 50%.

When seeking to trade in over-the-counter markets, institutional investors typically restrict both the number of potential counterparties they contact and the information they disclose (e.g., by requesting two-sided rather than one-sided quotes). We rationalize these important facts in a model featuring endogenous front-running. Although an additional contact intensifies competition and aids in finding a natural counterparty, it also intensifies information leakage—which can be costly if it helps a losing dealer to front-run. We also address information design: the client optimally provides no information about her trading direction when requesting quotes. We conclude with implications for market design and regulation.

Despite the prevalence of nonroutine analytical team tasks in modern economies, little is understood regarding how incentives influence performance in these tasks. In a series of field experiments involving more than 5,000 participants, we investigate how incentives alter behavior in teams working on such a task. We document a positive effect of bonus incentives on performance, even among teams with strong intrinsic motivation. Bonuses also transform team organization by enhancing the demand for leadership. Exogenously increasing teams' demand for leadership results in performance improvements comparable to those seen with bonus incentives, rendering it as a likely mediator of incentive effects

We develop a model of market entry under social learning through word of mouth (WOM). The success of an entrant depends on consumer awareness generated via WOM, modeled as a percolation process on a random graph. The likelihood of an entrant gaining significant awareness depends on network structure, characterized by the first three factorial moments of the degree distribution. We identify three pricing equilibria: blockaded, deterred, and accommodated entry. The model demonstrates that increased network density can shift equilibria from blockaded to deterred and eventually to accommodated entry. Numerical simulations suggest that consumer surplus may be nonmonotonic with respect to network density. Additionally, if incumbents can charge personalized prices based on consumers' connectivity, they may optimally set lower prices for highly connected consumers.

We propose a new notion of credibility for Bayesian persuasion problems. A disclosure policy is credible if the sender cannot profit from tampering with her messages while keeping the message distribution unchanged. We show that the credibility of a disclosure policy is equivalent to a cyclical monotonicity condition on the policy’s induced distribution over states and actions. We also characterize how credibility restricts the sender’s ability to persuade under different payoff structures. In particular, when the sender’s payoff is state independent, all disclosure policies are credible. We apply our results to the market for lemons and show that no useful information can be credibly disclosed by the seller.

We document that sales of individual products decline steadily throughout most of the product life cycle. Products quickly become obsolete as they face competition from newer products sold by competing firms and the same firm. We build a dynamic model that highlights an innovation-obsolescence cycle, where firms need to introduce new products to grow; otherwise, their portfolios become obsolete as rivals introduce their own new products. By introducing new products, however, firms accelerate the decline of their own existing products, further depressing their sales. This mechanism has sizable implications for quantifying economic growth and the impact of innovation policies.

This paper estimates the effect of financial sponsorship of clinical trials on reported drug efficacy, leveraging the insight that the exact same pairs of drugs are often compared in different trials conducted by parties with different financial interests. I assemble new psychiatric trial data to estimate that a drug appears substantially more effective when the trial is sponsored by that drug’s manufacturer, compared with the same drug tested against the same combination of drugs but without sponsorship. This difference is not explained by observable characteristics, but publication bias is important. Preregistration may be effective in overcoming this bias