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OLD PAPERS





Ego Utility and Information AcquisitionAbstract:

Based on extensive psychological evidence and the experience of most of us, it seems obvious that people intrinsically care about the perceptions of themselves, not only because it helps in making decisions. This paper explores some of the consequences of this motivation in a model where the agent derives utility from both financial outcomes and her beliefs about her ability (`ego utility'). The model can explain a variety of anomalous-looking behavior, like refusing to consider new information about past judgments, putting off making judgments, and holding on too long to losing decisions. Several applications are discussed, with particular attention to how to provide incentives to employees with ego utility.

Revised January 2001.





Emotional Agency: The Case of the Doctor-Patient RelationshipAbstract:

This paper identifies an array of complications in doctor-patient communication that arise when the patient suffers from anxiety. I assume that the patient derives utility from health outcomes as well as the anticipation of the exact same outcomes, and that the doctor wishes to maximize the patient’s utility. The doctor privately (and probabilistically) observes a diagnosis, which affects the optimal treatment. She then sends a message to the patient, who chooses a treatment. While formulated in terms of medical care, this formal model of “emotional agency” also applies to many other situations. If the doctor cannot certifiably convey her diagnosis, communication is endogenously limited to a treatment recommendation, which the doctor distorts toward the treatment that is optimal when the patient is relatively healthy. Paradoxically, more emotional patients get less useful recommendations, even though basing their treatment choice on better recommendations would make them less anxious. If the doctor can certifiably convey her diagnosis, she does so for good news, but unless she needs to “shock” the patient into behaving correctly, she pretends not to know what is going on when the news is bad. If the patient visits two doctors in a row, the second doctor reveals more information than the first one. Results from an original survey of practicing physicians confirm that doctors care about patients’ emotions, and alter their recommendations and other communication in response to them.

An earlier version of "Emotional Agency" (QJE 2006), focused on the doctor-patient relationship

Revised January 2004.