Ulrike Malmendier

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How do rational firms respond to consumer biases? In this paper, we analyze the profitmaximizing contract design of firms if consumers have time-inconsistent preferences and are partially naive about it. We consider markets for two types of goods: goods with immediate costs and delayed benefits (investment goods) such as health club attendance, and goods(More)
We investigate whether individual experiences of macroeconomic shocks affect financial risk taking, as often suggested for the generation that experienced the Great Depression. Using data from the Survey of Consumer Finances from 1960-2007, we find that individuals who have experienced low stock-market returns throughout their lives so far report lower(More)
Can incentives be effective when trying to encourage the development of good habits? We investigate the effect of paying people a non-trivial amount of money to attend an exercise facility a number of times during a one-month period. In two separate studies, we find that doing so leads to a large and significant increase in the average post-intervention(More)
We show that measurable managerial characteristics have significant explanatory power for corporate financing decisions. First, managers who believe that their firm is undervalued view external financing as overpriced, especially equity financing. Such overconfident managers use less external finance and, conditional on accessing external capital, issue(More)
This article presents the growing research area of Behavioural Corporate Finance in the context of one specific example: distortions in corporate investment due to CEO overconfidence. We first review the relevant psychology and experimental evidence on overconfidence. We then summarise the results of Malmendier and Tate (2005a) on the impact of(More)
Every year, 90% of Americans give money to charities. Is such generosity necessarily welfare enhancing for the giver? We present a theoretical framework that distinguishes two types of motivation: individuals like to give, for example, due to altruism or warm glow, and individuals would rather not give but dislike saying no, for example, due to social(More)
In many field settings, participants sort among environments based on their preferences, beliefs, and skills. Experiments, however, often ignore the potential impact of such sorting. We demonstrate the importance of sorting for experiments, in the domain of social preferences. When individuals are constrained to play a dictator game, 61% of the subjects(More)
Does board composition matter for corporate decisions? In this paper, we focus on the effect of financial expertise, a requirement considered in regulatory proposals. We use a novel data set on board composition covering 288 companies over 14 years. We find that financial experts significantly affect corporate decisions, but mainly in the interest of their(More)