Economists have not explicitly denied the existence and significance of visceral factors but have traditionally left them out of their analyses, whether because their influence is perceived as transient and hence unimportant, or because they are seen as too unpredictable and complex to be amenable to formal modeling. An attempt is made to show that both of these assumptions are false. Visceral factors have important, but often underappreciated, consequences for behavior. Moreover, both the determinants of visceral factors and their impact on behavior are not only systematic, but amenable to formal modeling.

In economic analyses of asymmetric information, better-informed agents are assumed capable of reproducing the judgments of less-informed agents. We discuss a systematic violation of this assumption that we call the "curse of knowledge." Better-informed agents are unable to ignore private information even when it is in their interest to do so; more information is not always better. Comparing judgments made in individual-level and market experiments, we find that market forces reduce the curse by approximately 50 percent but do not eliminate it. Implications for bargaining, strategic behavior by firms, principal-agent problems, and choice under uncertainty are discussed.

We develop a model of fragile self-esteem—self-esteem that is vulnerable to objectively unjustified swings—and study its implications for choices that depend on, or are aimed at enhancing or protecting, one’s self-view. In our framework, a person’s self-esteem is determined by sampling his memories of ego-relevant outcomes in a fashion that in turn depends on how he feels about himself, potentially creating multiple fragile “self-esteem personal equilibria.” Self-esteem is especially likely to be fragile, as well as unrealistic in either the positive or the negative direction, if being successful is important to the agent. A person with a low self-view might exert less effort when success is more important. An individual with a high self-view, in contrast, might distort his choices to prevent a collapse in self-esteem, with the distortion being greater if his true ability is lower. We discuss the implications of our results for mental well-being, education, job search, workaholism, and aggression.

This paper investigates financial attention using novel panel data on daily investor online account logins. We find support for selective attention to portfolio information. Account logins fall by 9.5% after market declines. Investors also pay less attention when the VIX volatility index is high. The level of attention and the attention/return correlation are strongly related to investor demographics (gender, age) and financial position (wealth, holdings). Using a new statistical decomposition, we show how aggregate and individual household trading are related to investor attention.

The authors present survey data challenging the assumption implicit in analyses of labor supply that, all else being equal, workers prefer declining over increasing wage profiles. The authors test several explanations for their results, including that (1) there is something special about wages (e.g., their association with productivity), as opposed to other types of payments, that induces the preference for increasing wages; (2) utility depends not only on absolute levels of consumption, but also on changes in consumption over time; and (3) respondents who prefer increasing wage profiles are irrational and would change their behavior if the rationale for preferring declining wages were explained.

Attention is an important resource in the modern economy and plays an increasingly prominent role in economic analysis. We summarize research on attention from both psychology and economics with a particular emphasis on its capacity to explain documented violations of classical economic theory. We also identify promising new directions for research, including attention-based utility, the recent proliferation of attentional externalities introduced by digital technology, the potential impact of artificial intelligence on the economics of attention, and the significant role that boredom, curiosity, and other motivational states play in determining how people allocate attention.

This paper discusses the discounted utility (DU) model: its historical development, underlying assumptions, and "anomalies" - the empirical regularities that are inconsistent with its theoretical predictions. We then summarize the alternate theoretical formulations that have been advanced to address these anomalies. We also review three decades of empirical research on intertemporal choice, and discuss reasons for the spectacular variation in implicit discount rates across studies. Throughout the paper, we stress the importance of distinguishing time preference, per se, from many other considerations that also influence intertemporal choices.