Matthew Joel Rabin (; born December 27, 1963) is an American economist. He is the Pershing Square Professor of Behavioral Economics in the Harvard Economics Department and Harvard Business School. Rabin's research focuses primarily on incorporating psychologically more realistic assumptions into empirically applicable formal economic theory. His topics of interest include errors in statistical reasoning and the evolution of beliefs, effects of choice context on exhibited preferences, reference-dependent preferences, and errors people make in inference in market and learning settings.

Background

Rabin was the Edward G. and Nancy S. Jordan Professor of Economics at the University of California, Berkeley Economics Department for 25 years before moving to Harvard. He received a Bachelor of Arts in Economics and Mathematics from University of Wisconsin–Madison in 1984 and PhD in Economics from MIT in 1989. Before entering MIT, he was a research student at the London School of Economics. and also the MacArthur "Genius" Fellowship. Rabin together with economist Botond Kőszegi published a series of papers elaborating on the idea of reference dependence in Prospect Theory, according to which monetary and hedonic prizes are evaluated in relation to a reference point, whereby losses loom larger than gains. In Kőszegi and Rabin's version, the reference point is determined by prior expectations of consumption. In this model, plans for future consumption both affect the future reference point, and are determined to maximize the agent's experience given that reference point. This necessitates the invocation of personal equilibrium, a concept which applies game-theoretic notions of equilibrium to single-agent settings where decision-making is reflexive. The 2009 paper extends the model to dynamic settings where information about future consumption is gradually revealed. Kőszegi and Rabin introduce the notion of news utility—the pleasure or displeasure experienced when a person learns new information about their future hedonic experience.

References

  • Psychology and Economics An essay by Matthew Rabin
  • In Honor of Matthew Rabin: Winner of the John Bates Clark Medal