We develop a formal framework for analyzing how decision making is informed by the extraction of statistical relationships from data. In our model, distinct datasets are generated by a common causal relationship that maps a relevant subset of predictors into a distribution over outcomes. A decision maker observes a dataset and seeks to extract a decision rule that maps a relevant subset of variables into actions, trading off the rule’s value against its complexity cost. Leveraging the invariance of the underlying causal rule across datasets, we derive novel testable predictions that decouple the rules' value from their costs in predicting both the ex-ante probability of extracting the invariant rule and the emergence of disagreement. We provide empirical support for these predictions using experimental evidence from Kendall and Oprea (2024).

We study, empirically and theoretically, how restitution helps restore cooperation after a breach or an exploratory defection. Restitution strategies propose a return to cooperation by cooperating against defection, and condition actions on the balance between cooperation given and received. We reanalyze experimental data from repeated Prisoner's Dilemma games and find empirical support for restitution strategies in general, and for a strategy we name Payback, in particular.  Besides explaining how subjects deal with conflicts, accounting for restitution strategies helps reconcile discrepancies between theory and experiments—such as the widespread use of non-equilibrium strategies like Tit-for-Tat and the limited predictive power of risk dominance under imperfect monitoring.

It has been amply shown that choice behavior is context-dependent. Evidence from the cognitive sciences suggests that this dependency may be driven by implicit associations. In this paper, we propose and study a choice-based model of contextual associations. We start by formalizing contexts by the set of concepts it contains. We then introduce associations by way of the implicit relationship between alternatives and concepts, which directly impacts the utility evaluation of alternatives. We study the empirical content of the model, establish conditions for identification, characterize its comparative statics, and propose several extensions. We provide an application to probabilistic voting, showing that our model rationalizes how political competition contributes to the polarization of parties’ values, as emphasized in the empirical literature.

In this paper, I explore the trade-off between efficiency and strategic risk in the context of a repeated prisoner’s dilemma with imperfect public monitoring. Since with imperfect monitoring deviations can happen on the equilibrium path, to keep the value of cooperation high, players have to adopt more ``lenient” and ``forgiving” strategies, being more exposed to opportunistic behavior. For a broad class of one-dimensional public signals, I show that the maximal payoff achievable under a (symmetric) cooperative risk-dominant equilibrium is strictly lower than the maximal symmetric equilibrium payoff. Contrary to the perfect monitoring case, this holds even when the discount factor converges to 1.

This paper studies cooperation when individuals endogenously select the institutional environment in which they interact. Agents have heterogeneous preferences for cooperation and form beliefs about others through self-projection: individuals infer the prevalence of cooperative behavior from their own dispositions. I compare an exogenously imposed Prisoner’s Dilemma with an endogenous institution game in which agents choose between a Prisoner’s Dilemma and a Harmony Game, where cooperation is a pareto-efficient, but less profitable, equilibrium. The theoretical analysis shows that, under sufficiently strong self-projection, endogenous institutional choice yields higher cooperation in the payoff-dominant equilibrium of the Prisoner’s Dilemma than under exogenous assignment. A one-shot laboratory experiment provides supporting evidence. Beliefs about others’ behavior vary systematically with individual cooperative preferences, cooperative subjects disproportionately enter the Prisoner’s Dilemma, and cooperation in the Prisoner’s Dilemma is higher when entry is endogenous than when it is imposed.

We examine how the fundamental attribution error (FAE) shapes hiring decisions in environments where performance reflects both worker ability and situational factors such as task difficulty. Drawing on the cursed-equilibrium framework of Eyster and Rabin (2005), we model employers as partially neglecting the correlation between the task environment and realized performance, thereby interpreting performance through a systematically distorted signal. Our analysis yields three main results. First, workers who face a higher share of easy tasks are more likely to be hired, even when their underlying performance is no better than that of their competitors. Second, the magnitude of this distortion increases when (a) the payoff difference between easy and difficult tasks is smaller and (b) differences in task composition across workers are larger. Third, when workers anticipate employers' cursedness, they strategically choose a higher share of easy tasks, generating inefficiencies in task allocation. Overall, the framework highlights how misperceptions of situational influences can distort inference and behavior in hiring markets.