Yuval
Salant Associate Professor of Managerial Economics and Decision Sciences Kellogg School of Management 

CV  
Google Scholar Profile  
Research Interests  
Foundations of Behavioral Economics, Bounded Rationality, Choice Theory 

How to contact me 

Mailing address: 

MEDS Department Kellogg School of Management Northwestern University 2001 Sheridan Rd Evanston, IL 602082001 USA 

Email: ysalant@northwestern.edu  
Phone: 18474915149  
Published and forthcoming papers 
1. “Isn't everyone like me?: On the presence of selfsimilarity in strategic interactions”, with Ariel Rubinstein, Judgment and Decision Making, forthcoming We propose that in strategic interactions a player is influenced by selfsimilarity, i.e., he tends to believe that other players will choose the same action that he does to a greater extent than players who choose any other action. To demonstrate this, we asked participants to report their beliefs in a twoplayer twoaction symmetric game with the feature that there should be negative correlation between a player's action and the probability he assigns to his opponent choosing the same action. We find that players' reported beliefs exhibit the opposite pattern, i.e., they are more likely to choose an action the stronger is their belief that their opponent will also choose the same action. We view this pattern as evidence for the presence of selfsimilarity.

2. “Reallocation Costs and Efficiency”, with Ron Siegel, American Economic Journal: Microeconomics, forthcoming We study the efficient allocation of a divisible asset when reallocation is costly. Two players initially divide an asset between them. At the time of this initial division the players' valuations for the asset are uncertain. After the uncertainty resolves, costly reallocation may take place. We first establish that the surplus associated with efficient reallocation monotonically increases or decreases in the concentration of the initial division for a wide range of cost specifications. We then characterize how the budget necessary to implement the efficient reallocation changes with the initial division.

3. “On the Causes and Consequences of Ballot OrderEffects”, with Marc Meredith, Political Behavior, 35 (2013), No. 1, 175197 
Featured in the Wall Street Journal (online and print), Chicago Tribune (online and print), Postmedia News 
We investigate the effect of ballot order on the outcomes of California city council and school board elections. Candidates listed first win office between four and five percentage points more often than expected absent order effects. This first candidate advantage is larger in races with more candidates and for higher quality candidates. The first candidate advantage is similar across contexts: the magnitude of the effect is not statistically distinguishable in city council and in school board elections, in races with and without an open seat, and in races consolidated and not consolidated with statewide general elections. Standard satisficing models cannot fully explain ballot order effects in our dataset of multiwinner elections.

4. “Eliciting Welfare Preferences from Behavioral Datasets”, with Ariel Rubinstein, Review of Economic Studies, 79 (2012), No. 1, 375387 An individual displays various preference orderings in different payoffirrelevant circumstances. It is assumed that the variation in the observed preference orderings is the outcome of some cognitive process that distorts the underlying preferences of the individual. We introduce a framework for eliciting the individual's underlying preferences in such cases, and then demonstrate it for two cognitive processes  satisficing and small assessment errors.

5. “Procedural Analysis of Choice Rules with Applications to Bounded Rationality”, American Economic Review, 101 (2011), No. 2, 724748 I study how limited abilities to process information affect choice behavior. I model the decision making process by an automaton, and measure the complexity of a specific choice rule by the minimal number of states an automaton implementing the rule uses to process information. I establish that any choice rule that is less complicated than utility maximization displays framing effects. I then prove that choice rules that result from an optimal tradeoff between maximizing utility and minimizing complexity are historydependent satisficing procedures that display primacy and recency effects.

6. “( A , f ): Choice with Frames”, with Ariel Rubinstein, Review of Economic Studies, 75 (2008), No. 4, 12871296 We develop a framework for modeling choice in the presence of framing effects. An extended choice function assigns a chosen element to every pair (A , f ) where A is a set of alternatives and f is a frame. A frame includes observable information that is irrelevant in the rational assessment of the alternatives, but nonetheless affects choice. We relate the new framework to the classical model of choice correspondence. Conditions are identified under which there exists either a transitive or a transitive and complete binary relation R such that an alternative x is chosen in some (A , f ) iff x is Rmaximal in the set A. We then demonstrate that the framework of choice correspondence misses information, which is essential to economic modeling and which is incorporated in the extended choice function.

7. “Some Thoughts on the Principle of Revealed Preference”, with Ariel Rubinstein, In Handbooks of Economic Methodologies (Andrew Caplin and Andrew Schotter, eds.), New York: Oxford University Press, 2008, 115124 The Principle of Revealed Preference is a methodological paradigm whereby observed choices of an individual are used only to reveal her mental preferences. We make three statements about the way that economists view this principle as a modeling guide. First, we argue that there is no escape from including mental entities such as mental preferences in addition to observed choices in economic models. Second, we assert that economists should be looking at models in which an observed choice leads to conclusions other than that the chosen element is always mentally preferred to the other elements in the choice problem. Finally, we claim that there is room for models of choice in which the observable information about a choice situation is richer than just the set of available alternatives and the alternative chosen.

8. “On the Learnability of Majority Rule”, Journal of Economic Theory, 135 (2007), No. 1, 196213 (Available online at ScienceDirect) I establish how large a sample of past decisions is required to predict future decisions of a committee with few members. The committee uses majority rule to choose between pairs of alternatives. Each member’s vote is derived from a linear ordering over all the alternatives. I prove that there are cases in which an observer cannot predict precisely any decision of a committee based on its past decisions. Nonetheless, approximate prediction is possible after observing relatively few random past decisions.

9. “A Model of Choice from Lists”, with Ariel Rubinstein, Theoretical Economics, 1 (2006), No. 1, 317 The standard economic choice model assumes that the decision maker chooses from sets of alternatives. In contrast, we analyze a choice model in which the decision maker encounters the alternatives in the form of a list. We present two axioms similar in nature to the classical axioms of choice from sets. We show that they characterize all the choice functions from lists that involve the choice of either the first or the last optimal alternative in the list according to some preference relation. We then relate choice functions from lists to the classical notions of choice correspondences and random choice functions.

Working papers 
10. “Contracts with Framing”, with Ron Siegel We study a model of contracts in which a profitmaximizing seller uses framing to influence buyers' purchase behavior. Framing temporarily affects how buyers evaluate different products, and buyers can renege on their purchases after the framing effect wears off. We characterize the optimal contracts with framing and their welfare properties in several settings. Framing that is not too strong reduces total welfare in regulated markets with homogenous buyers, but increases total welfare in markets with heterogenous buyers when the proportion of buyers with low willingness to pay is small.

11. “The Effect of Visual Minority on Children's Choice and Consumption”, with Michal Maimaran We study how changing the relative frequencies of options in a choice set affects young children’s decision making. In food and nonfood choice tasks, we asked four to fiveyearold children to choose from a set in which each option appeared multiple times. When options were visually different from each other, children were more likely to choose the minority option, that is, the option that appeared the fewest number of times in the choice set. In particular, children chose a fruit over crackers when the fruit became the minority option, even though they had a strong preference for crackers when neither option was in minority. Adults did not tend to choose the minority option in similar tasks, suggesting this effect is due to developmental sources.

Work in progress 
12. “Statistical Inference in Games”, with Josh Cherry We consider statistical inference in games. Each player obtains a random sample of other players’ actions, uses statistical inference to form beliefs about their actions, and bestresponds to those beliefs when choosing his action. In a Generalized Sampling Equilibrium (GSE), the random sample is drawn from the distribution of players' actions based on this process. We characterize the set of GSEs in large twoaction games, and compare their predictions for different sample sizes and statistical inference procedures. An application to search and matching markets demonstrates that statistical inference from small samples leads to significantly larger unemployment than in Nash equilibrium.

13. “On the Relevance of Probability Distortions in the Extended Warranties Market”, with Jose Miguel Abito We study the reasons for the high profits in the extended warranties market. Using data from a big US consumer electronics retailer on extended warranty purchases between 1998 and 2004, we estimate a model in which a profitmaximizing monopolistic seller offers extended warranties to a population of riskaverse consumers who may distort failure probabilities. We find that overweighting of failure probabilities is a relevant factor in determining economic outcomes in this market: without probability overweighting, profits drop by 90% and consumer surplus more than doubles. We also find that probability overweighting is affected by the environment and is reduced with learning: there is less overweighting in online transactions than in instore transactions, and the likelihood of the same household buying an extended warranty is reduced with time.
