I am a Senior Lecturer (Associate Professor) in Economics at the University of Essex. I am the director of the Essex Centre for Behavioural Science which houses the state-of-the-art Essex Behavioural Science Laboratory (ESSEXLab) . In addition, I serve as an Associate Editor at Journal of Economic Behavior & Organization .
I am a behavioral economist. In my research, I use a broad portfolio of research methods–including experiments and advanced microeconometric techniques–to further our understanding of human judgment and decision making. Whereas most empirical research in this area relies on experiments or surveys, I often employ large and rich data sets from carefully selected field settings that can be characterized as natural (or “naturally occurring”) experiments.
I completed my PhD in Economics at Erasmus University Rotterdam and Tinbergen Institute under the supervision of Peter Wakker and Han Bleichrodt . Before joining Essex, I held positions at the University of Nottingham and the Vrije Universiteit (VU) Amsterdam. I have been a visiting researcher at, amongst others, the University of Chicago, Carnegie Mellon University, and the Max Planck Institute for Human Development in Berlin
PhD in economics, 2014
Erasmus University Rotterdam
MSc in behavioural economics, 2009
University of Nottingham
MSc in sociology and social research, 2008
BSc in sociology, 2006
Loss aversion has been shown to be an important driver of people’s investment decisions. Encouraged by regulators, financial institutions are in search of ways to incorporate clients’ loss aversion in their risk classifications. The most critical obstacle appears to be the lack of a valid measurement method for loss aversion that can be straightforwardly incorporated into existing processes. This paper presents the results of two large-scale implementations of such a method within a risk-profiling application of an established financial institution. In total, we elicit loss aversion for 1,040 employees and 3,740 clients. We find that the observed distributions align with existing findings, and that loss aversion is largely independent of the risk-return preferences commonly used for investor classification. Furthermore, the correlations we observe between these two preferences and individuals’ background characteristics align with those observed in the literature. Loss aversion is strongly related to education—higher educated individuals being more loss averse—whereas risk aversion is strongly related to gender, age, and clients’ financial situation—women, more senior, and less wealthy participants being more risk averse. These findings support the conjecture that risk and loss aversion are complementary in capturing investor preferences.
We examine high-stakes strategic choice using more than 40 years of data from the American TV game show The Price Is Right. In every episode, contestants play the Showcase Showdown, a sequential game of perfect information for which the optimal strategy can be found through backward induction. We find that contestants systematically deviate from the subgame perfect Nash equilibrium. These departures from optimality are well explained by a modified agent quantal response model that allows for limited foresight. The results suggest that many contestants simplify the decision problem by adopting a myopic representation and optimize their chances of beating the next contestant only. In line with learning, contestants’ choices improve over the course of our sample period.
Conditional cooperation is usually investigated in experiments where the choices of others are known. In many circumstances, however, there is uncertainty about others’ cooperativeness. Using a novel experimental protocol, we manipulate the perceived likelihood of cooperation in a Prisoner’s Dilemma, and whether such information is described unambiguously or learned through experience and thus ambiguous. We report on a ‘description-experience gap’ in which rare events appear to be more influential under experience than under description. This contrasts with earlier results from the individual choice literature. We show how stronger priors under social than individual uncertainty can account for this reversal.
A sizable literature shows that many people are loss averse, being more sensitive to losses than to commensurate gains. Furthermore, it has been shown that an individual’s level of loss aversion is an important driver of their investment decisions. Based on these findings, regulators are encouraging financial institutions to incorporate clients’ loss aversion in risk profiling classifications. The most critical obstacle to doing so is the lack of a valid measurement method that can straightforwardly be integrated into existing processes.
In 2016, my co-authors and I published a paper introducing a novel theoretically valid way to elicit an individual’s loss aversion in the Journal of Risk and Uncertainty. This brought me in contact with Jurgen Vandenbrouke, an expert general manager at a large Belgian bank, looking for a way to measure loss aversion. I collaborated with him and his team to integrate our method for eliciting loss aversion into their risk profiling application. This approach was trailed in Belgium and implemented in the actual risk profiling application of the bank in Ireland. We have written a working paper describing these implementations and the results obtained.
Jurgen Vandenbrouke is now the director of Everyone Invested, a wealth tech spinoff of the Belgian bank. One product they market is their Profiler, which includes our method to elicit loss aversion. As a result, more financial institutions will likely adopt our method over the coming years.
At the University of Essex, I teach EC955: Experimental Economics at the master level. This module equips students with the tools to critically access experimental methods. Students put their theoretical knowledge into practice, learning how to design experiments and interpret their results. For this, students will be grouped into teams who will collaborate to design an experiment and present it in class. Students will also critically assess another group’s experimental design. In addition, I also supervise undergraduate dissertations.
Previously, at the Vrije Universiteit Amsterdam, I taught at the undergraduate, graduate, and postgraduate levels.
At the bachelor level, I lectured in the course Behavioral Finance and Real Estate (BSc, 3rd year). This course provides a behavioral perspective on real estate decision-making and markets. Students learn how behavioral biases affect participants’ decisions in real estate markets and how the bounded rationality of market participants can explain real estate market dynamics. In the course, I provided students with a psychological perspective on negotiations, property valuations, and mortgage choices.
At the master level, I provided lectures in behavioral ethics and negotiation in the course Behavioral Finance.
At the executive education level, I lectured on behavioral ethics in the program Compliance and Integrity Management.
I also supervised MSc theses on topics related to behavioral finance and provided tutorials in Finance (BSc, 2nd year). In this latter course, we built the foundation for the study of corporate finance and investments. The focus was on financial decision-making in theory and practice. Our coverage of core finance topics included: i) capital budgeting, ii) asset pricing, and iii) financial investment.
During my Ph.D. at Erasmus University Rotterdam, I designed and taught tutorials in behavioral economics and supervised both BSc and MSC thesis in topics related to behavioral economics and behavioral finance.
Here, I provide a selected overview of the coverage that my research has received in popular media:
For the paper Does Losing Lead to Winning? An Empirical Analysis for Four Sports: NRC (Dutch)
For the paper Gender and Willingness to Compete for High Stakes: Süddeutsche Zeitung (German)
For the paper Can the Market Divide and Multiply? A Case of 807 Percent Mispricing: Wall Street Journal
For the papers Measuring Loss Aversion under Ambiguity: A Method to Make Prospect Theory Completely Observable and Behavioral Risk Profiling: Measuring Loss Aversion of Individual Investors: De Tijd (Dutch) ; L’Echo (French)
For the paper The Evil Eye: Eye Gaze and Competitiveness in Social Decision Making: The Conversation