Title: Financial choices and the decision-making context
Description: The three essays in this dissertation study how financial choices are influenced by elements of the context in which the decisions are made. The first essay, co-authored with Katherine L. Milkman, examines the effect of small windfalls on consumer spending decisions by comparing the purchases online grocery customers make when redeeming $10-off coupons with the purchases they make without coupons. Controlling for customer fixed effects and other variables, we find that grocery spending increases by $1.59 when a $10-off coupon is redeemed and that the extra spending is focused on groceries that a customer does not typically buy. These results are consistent with the theory of mental accounting but are not consistent with the standard permanent income or lifecycle theory of consumption. The second essay is co-authored with James J. Choi, David. Laibson, Brigitte C. Madrian, and Katherine L. Milkman. We report the results of a field experiment evaluating the effect of peer information on retirement savings decisions. Non-participants and low savers in a large manufacturing firm's 401(k) plan received letters offering them the opportunity to enroll or increase their contribution rates in the plan by returning a simple reply form. Employees were randomly assigned to receive no peer information or to receive information about the fraction of their coworkers in a relevant age group who were engaging in desirable savings behavior.

For the subpopulation of unionized non-participating employees, we find that peer information reduced plan enrollment rates. However, for the subpopulation of non-unionized non-participants, peer information increased enrollment rates. In the third essay, I study the investment strategies of oil and gas firms operating in the Gulf of Mexico. I compare the drilling decisions of teams of firms that jointly develop tracts to the drilling decisions of solo firms that individually develop tracts. My empirical strategy addresses the endogenous matching of firms to tracts by focusing on cases where teams narrowly outbid solo firms or solo firms narrowly outbid teams in tract auctions. The wells drilled by teams are more profitable than those drilled by solo firms, and teams engage in less exploratory drilling than solo firms.