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Introduction: Marc Kaufmann

I am an assistant professor in Economics who did a masters in Mathematics in Cambridge (UK) some 10 years ago. I am an applied theorist, working at the intersection of psychology and economics - how to use insights from psychology to make ad hoc assumptions in economic models, where I use the literal meaning of ad hoc: "for this specific purpose". This leads to less grandiose predictions -- the assumptions are ad hoc and thus specific -- but hopefully also more useful.

My interest in category theory comes in two forms. First, I believe that it should be possible to leverage computers more in economics and other social sciences, in order to build more robust models (ones that are not so limited because we cannot solve them easily with pen and paper), and my feeling is that category theory might be of some use there. Second, I am interested in figuring out which questions are (in some sense that is nebulous to me currently) possible to answer meaningfully within certain classes of models or types of data, and which aren't -- questions of robustness of models. Some of that fits more naturally within statistics (sufficient statistics are a big thing in economics, especially the empirical parts), but I feel that category theory might help me think more clearly as well - or if not, it was worth a shot.

Comments

  • 1.

    Hey Marc,

    I am a little curious: what are some of your favorite papers in behavioral economics?

    It's great to have you on the forums!

    ~Matt

    Comment Source:Hey Marc, I am a little curious: what are some of your favorite papers in behavioral economics? It's great to have you on the forums! ~Matt
  • 2.

    Hi Matthew,

    it depends on what you mean by favourite. There are many papers by Kahneman and Tversky that I like and which are seminal, but they are so seminal that essentially everyone knows them.

    I find lots of George Loewenstein's papers very interesting, in particular what he calls 'Hot-cold' states and which he generalized and formalized with Ted O'Donoghue and Matthew Rabin (who was my PhD advisor), calling it projection bias. This is very much in the heuristics and biases literature. Unsurprisingly, I like Matthew Rabin's work a lot, which one can summarize as using the tools from neoclassical (call it rational if you must) economics with the same focus on formal modeling, maximization of some objective function, while allowing for this objective function to not be the "correct" thing to maximize -- which people may not notice, or they do notice but can't help themselves, or they notice but don't realize the objective will change over time, etc etc. Thus it tries to take findings from psychology and formalize it within the neoclassical framework. The reason for the formal modeling is not formalizing for formalizing's sake, but in order to allow us to map out the implications in more complicated settings (usually markets, or firms). You can't do that really by simply taking a finding in psychology and saying "Ha, people are stupid, therefore financial crisis".

    Other people who are on the theory front and whose work I like are Botond Koszegi, Paul Heidhues -- they have a paper on credit cards that is nice -- and Rani Spiegler, among others. Those are probably the closest to what I work on, at least currently, so they spring to mind. There are loads of people working on more empirical, often experimental, stuff.

    I realize those are people, rather than papers, so paper wise, my favorites would be:

    • O'Donoghue and Rabin (1999), "Doing it now or later"
    • Koszegi and Rabin (2009) "Reference-Dependent Consumption Plans"
    • Loewenstein and Prelec (1998) "The Red and the Black"; totally not in the league as the other two in terms of being right, but it's really interesting
    • Loewenstein, O'Donoghue, and Rabin (2003) "Projection Bias" (or some such); I overrate this, as it's what I (partially) work on
    • DellaVigna (2009) "Psychology and Economics in the Field" (or something like that) is a great overview where the field was 10 years ago

    OK, I wanted this to be a short answer, now it is a long answer, so I'll stop.

    Comment Source:Hi Matthew, it depends on what you mean by favourite. There are many papers by Kahneman and Tversky that I like and which are seminal, but they are so seminal that essentially everyone knows them. I find lots of George Loewenstein's papers very interesting, in particular what he calls 'Hot-cold' states and which he generalized and formalized with Ted O'Donoghue and Matthew Rabin (who was my PhD advisor), calling it projection bias. This is very much in the heuristics and biases literature. Unsurprisingly, I like Matthew Rabin's work a lot, which one can summarize as using the tools from neoclassical (call it *rational* if you must) economics with the same focus on formal modeling, maximization of some objective function, while allowing for this objective function to not be the "correct" thing to maximize -- which people may not notice, or they do notice but can't help themselves, or they notice but don't realize the objective will change over time, etc etc. Thus it tries to take findings from psychology and formalize it within the neoclassical framework. The reason for the formal modeling is not formalizing for formalizing's sake, but in order to allow us to map out the implications in more complicated settings (usually markets, or firms). You can't do that really by simply taking a finding in psychology and saying "Ha, people are stupid, therefore financial crisis". Other people who are on the theory front and whose work I like are Botond Koszegi, Paul Heidhues -- they have a paper on credit cards that is nice -- and Rani Spiegler, among others. Those are probably the closest to what I work on, at least currently, so they spring to mind. There are loads of people working on more empirical, often experimental, stuff. I realize those are people, rather than papers, so paper wise, my favorites would be: - O'Donoghue and Rabin (1999), "Doing it now or later" - Koszegi and Rabin (2009) "Reference-Dependent Consumption Plans" - Loewenstein and Prelec (1998) "The Red and the Black"; totally not in the league as the other two in terms of being right, but it's really interesting - Loewenstein, O'Donoghue, and Rabin (2003) "Projection Bias" (or some such); I overrate this, as it's what I (partially) work on - DellaVigna (2009) "Psychology and Economics in the Field" (or something like that) is a great overview where the field was 10 years ago OK, I wanted this to be a short answer, now it is a long answer, so I'll stop.
  • 3.

    A more recent and comprehensive overview is Dhami's massive (1798 pages!) "The Foundations of Behavioral Economic Analysis" (Oxford University Press).

    Comment Source:A more recent and comprehensive overview is Dhami's massive (1798 pages!) "The Foundations of Behavioral Economic Analysis" (Oxford University Press).
  • 4.

    Have you even skimmed Dhami? I probably should do at some point, but it seems too long, especially in a field that is growing lots.

    The first Handbook in Behavioral Economics should also come out soon, which should be very good.

    Comment Source:Have you even skimmed Dhami? I probably should do at some point, but it seems too long, especially in a field that is growing lots. The first Handbook in Behavioral Economics should also come out soon, which should be very good.
  • 5.

    Barely skimmed; it seems quite good to me, but I am not an expert in BE. I bought it as an encyclopaedic reference more than as a textbook.

    Comment Source:Barely skimmed; it seems quite good to me, but I am not an expert in BE. I bought it as an encyclopaedic reference more than as a textbook.
  • 6.

    I made a discussion group from economics, you should continue this discussion there so everyone else can see and join in. :)

    Applied Category Theory for the Working Entrepreneur and Economist

    Comment Source:I made a discussion group from economics, you should continue this discussion there so everyone else can see and join in. :) [Applied Category Theory for the Working Entrepreneur and Economist](https://forum.azimuthproject.org/discussion/2088/applied-category-theory-for-the-working-entrepreneur-and-economist)
  • 7.

    Keith: thanks for creating that discussion group; I have posted a summary of the above discussion there (I hope Marc does not mind!)

    Comment Source:Keith: thanks for creating that discussion group; I have posted a summary of the above discussion there (I hope Marc does not mind!)
  • 8.

    Thanks Keith, no I don't mind (as you can tell I am here rather sporadically, as this is not my top priority - I will check eventually).

    Comment Source:Thanks Keith, no I don't mind (as you can tell I am here rather sporadically, as this is not my top priority - I will check eventually).
  • 9.

    Welcome to the course, Marc! Where are you an assistant professor?

    I hope people interested in economics have some interesting discussions here. I have vague thoughts on economics, and I think category theory could be helpful in this subject... but I don't know enough about it to try to work on it. (Not everyone is stopped by that.)

    Comment Source:Welcome to the course, Marc! Where are you an assistant professor? I hope people interested in economics have some interesting discussions here. I have vague thoughts on economics, and I think category theory could be helpful in this subject... but I don't know enough about it to try to work on it. (Not everyone is stopped by that.)
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