Matthew Rabin - Faculty & Research - Harvard Business School
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Matthew Rabin

Professor (Harvard University)

Negotiation, Organizations & Markets

Matthew Rabin is the Pershing Square Professor of Behavioral Economics in the Harvard Economics Department and Harvard Business School.

Before that, he spent 25 years at the wonderful University of California, Berkeley Economics Department.  His research focuses primarily on incorporating psychologically more realistic assumptions into empirically applicable formal economic theory. His current topics of interest include errors in statistical reasoning and the evolution of beliefs, effects of choice context on exhibited preferences, reference-dependent preferences, and errors people make in inference in market and learning settings. He received his PhD from MIT in 1989, the same year he joined the Berkeley faculty as an assistant professor. He is a member of the Russell Sage Foundation Behavioral Economics Roundtable and co-organizer of the Russell Sage Summer Institute in Behavioral Economics. He has been a visiting professor at M.I.T., London School of Economics, Northwestern, Harvard, and Cal Tech, as well as a visiting scholar at the Center for Advanced Study in Behavioral Sciences (at Stanford) and the Russell Sage Foundation.

Professor Rabin's honors include Most Likely to Express His Opinion (Springbrook High School); Alfred P. Sloan Research Fellow; Graduate Economics Association Outstanding Teaching Award; MacArthur Foundation Fellow; Econometric Society Fellow; John Bates Clark Medal from the American Economic Association; and Fellow of the American Academy of Arts and Sciences.

Working Papers
  1. Channeled Attention and Stable Errors

    Tristan Gagnon-Bartsch, Matthew Rabin and Joshua Schwartzstein

    A common critique of models of mistaken beliefs is that people should recognize their error after observations they thought were unlikely. This paper develops a framework for assessing when a given error is likely to be discovered, in the sense that the error-maker will deem her mistaken theory implausible. The central premise of our approach is that people channel their attention through the lens of their mistaken theory, meaning a person may ignore or discard information her mistaken theory leads her to consider unimportant. We propose solution concepts embedding such channeled attention that predict when a mistaken theory will persist in the long run even with negligible costs of attention, and we use this framework to study the “attentional stability” of common errors and psychological biases. While many costly errors are prone to persist, in some situations a person will recognize her mistakes via “incidental learning”: when the data she values, given her mistaken theory, happen to also tell her how unlikely her theory is. We investigate which combinations of errors, situations, and preferences tend to induce such incidental learning vs. factors that render erroneous beliefs stable. We show, for example, that a person may never realize her self-control problem even when it leads to damaging behavior and may never notice the correlation in others’ advice even when that failure leads her to follow repetitive advice too much. More generally, we show that for every error there exists an environment where the error persists and is costly. Uncertainty about the optimal action paves the way for incidental learning, while being dogmatic creates a barrier.

    Keywords: Perception; Behavior; Theory; Situation or Environment;

    Citation:

    Gagnon-Bartsch, Tristan, Matthew Rabin, and Joshua Schwartzstein. "Channeled Attention and Stable Errors." Harvard Business School Working Paper, No. 18-108, June 2018.  View Details