The thesis investigates the impact of informational and behavioral frictions on decision-making processes and examines potential remedies to mitigate these frictions.

The first chapter, “Motivated Misspecification,” introduces a model of expectation management and investigates how the type of misperception is determined in a principal-agent framework. The principal controls the agent’s expectation of a project’s potential, and the agent exerts effort over time. An unrealistically high expectation stimulates effort in the short run but potentially backfires and lowers the agent’s effort in the long run. I characterize circumstances under which the principal makes the agent overly optimistic or pessimistic about the project. The key intuition is that, to sustain excessive effort, the principal should downplay factors that affect project output independent of the agent’s effort. Such manipulation inflates the agent’s perceived return to her effort. My work thus provides a novel approach to induce effort (perception manipulation), complementary to the usual monetary or informational incentives studied in the principal-agent theory. I apply my results to understand manipulation in a wide range of interactions, such as mentorship and abusive relationships.

The second chapter, “Procrastination and Commitment,” proposes a tractable model of procrastination. A present-biased agent has a task to complete by a fixed deadline. I characterize the agent’s effort over time and study the interplay between present bias and task features. I then consider a natural remedy to procrastination on a long-term task, namely, committing to a series of short-term goals. I show that short-term goals weakly impair a present-biased agent’s welfare. This provides a cautionary counterpoint to the bulk of literature on time inconsistency, where commitment can strictly enhance welfare for present-biased agents.

The third chapter, “Signaling Design,” is an ongoing collaborative work with Matteo Camboni, Mallesh Pai, and Rakesh Vohra. We revisit the classic job-market signaling model of Spence (1973), introducing profit-seeking schools as intermediaries that design the mapping from candidates’ efforts to job-market signals. Each school commits to an attendance fee and a signaling structure. We investigate how the market structure of schools affects signaling options available to the market.