Thomas Graeber

Photo Thomas Graeber I am an Assistant Professor at Harvard Business School.
My research is in behavioral and experimental economics.

Please find my [CV here]. Contact me at [].


Cognitive Uncertainty
with Benjamin Enke
[abstract]   [pdf]   [media: The Economist  ·  VoxEU]
Because many economic decisions are difficult, people may exhibit cognitive uncertainty: subjective uncertainty about what the optimal action is. In the presence of such cognitive uncertainty, people implicitly compress objective probabilities towards a cognitive default of 50:50. By experimentally measuring and exogenously manipulating cognitive uncertainty, this idea brings together and partially explains a set of striking similarities in well-known behavioral anomalies in choice under risk, choice under ambiguity, belief updating, and survey forecasts of economic variables. Structural estimations show that the pronounced inverse S-shaped response patterns that pervade these literatures result from how cognitive uncertainty varies with objective probabilities.

Inattentive Inference
[abstract]   [under revision]
This paper studies why belief formation errors arise in a novel updating task that captures a key feature of information structures in practice: people need to learn about a state of the world from information that also depends on other unobserved states. For example, consider someone trying to infer effort (X) from observed performance (S = X + Y), which is also influenced by luck (Y). The first part of the paper uses a series of laboratory and online experiments to causally demonstrate a pervasive neglect of alternative causes in information structures, leading to excessively sensitive and overprecise beliefs. The second part explores the mechanisms behind this neglect. Evidence from more than twenty treatments consistently shows that inattention to alternative causes is not driven by excessive complexity, computational errors or deliberate effort reduction. Instead, people spontaneously form incomplete mental models of the problem that determine how information is processed. They are confident in their misspecified models and unaware of the resulting error. These mental representations are not stable but context-dependent: cues that direct attention to the neglected part of the problem alleviate the bias.

Heterogeneity of Gain-Loss Attitudes and Expectations-Based Reference Points
with Lorenz Goette, Alex Kellogg and Charles Sprenger
[abstract]   [pdf]
This project examines the role of heterogeneity in gain-loss attitudes for identifying models of expectations-based reference dependence (Kőszegi and Rabin, 2006, 2007) (KR). Different gain-loss attitudes lead to different signs for KR comparative statics. Failure to account for the known heterogeneity in gain-loss attitudes is a central confounding factor challenging prior tests of the KR model conducted under the assumption of universal loss aversion. We document heterogeneous treatment effects over gain-loss types in both an initial experiment and an exact replication. Recognizing heterogeneity over types allows us to both recover the KR model’s central predictions, and account for inconsistency across prior empirical tests.

Delayed Negative Effects of Prosocial Spending on Happiness
with Armin Falk   (Proceedings of the National Academy of Sciences, 2020, vol. 117 (12), pp. 6463-6468)
[abstract]   [pdf]   [media: CNN  ·  Deutschlandfunk  ·  Frankfurt Allgemeine WOCHE  ·  la Repubblica]
Does prosocial behavior promote happiness? We test this longstanding hypothesis in a behavioral experiment that extends the scope of previous research. In our Saving a Life paradigm, every participant either saved one human life in expectation by triggering a targeted donation of 350 euros or received an amount of 100 euros. Using a choice paradigm between two binary lotteries with different chances of saving a life, we observed subjects’ intentions at the same time as creating random variation in prosocial outcomes. We repeatedly measured happiness at various delays. Our data weakly replicate the positive effect identified in previous research but only for the very short run. One month later, the sign of the effect reversed, and prosocial behavior led to significantly lower happiness than obtaining the money. Notably, even those subjects who chose prosocially were ultimately happier if they ended up getting the money for themselves. Our findings revealed a more nuanced causal relationship than previously suggested, providing an explanation for the apparent absence of universal prosocial behavior.