Essays on Behavioral and Labor Economics

This dissertation consists of three essays on behavioral and labor economics, examining individuals’ and households’ decision-making patterns. Chapter 1 investigates whether individuals accurately infer their own abilities and preferences from practice experiences with different objective difficulties. It presents a novel experimental design providing evidence that, even with full information, temporary exogenous situational factors strongly impact beliefs and subsequent career choices. The misattribution of temporary conditions as personal skills and tastes led participants to costly prediction and task choice errors. Next, chapter 2 studies the consequences of narrative thinking in the domain of valuations. Experimental participants either told the story or listed the attributes of an item they already owned and were then surprisingly offered to sell it via an incentive-compatible mechanism. Thinking about their items in terms of narratives, compared to analytical thinking, shifted participants’ value considerations, resulting in significantly higher minimal selling prices and rates of refusing all prices. Finally, chapter 3 examines how households’ consumption patterns are affected by intra-household bargaining power. Using gender-specific labor market shocks, industry robots and fracking, as random variations in the economic stature of one of the spouses shows that when the spouse’s bargaining power increases, the household’s consumption genderness index shifts in their favor. The index is derived from a novel machine learning model measuring consumption similarity to households consisting of a single man or woman. The same approach was applied to calculate further indices and examine bargaining power effects on children’s products as well.