We study the role that investors and financial intermediaries can play in tackling the climate emergency. Our aim is to harness financial economic theory and data analytics to generate recommendations useful to regulators and practitioners. Our proposal consists in three projects: • Project 1 offers an economic theory of the impact of responsible investors. We characterise the optimal investment policy across sectors of socially responsible investors seeking impact. The analysis generates concrete recommendations.. • Project 2 is mainly experimental. The goal is to determine whether people, when they are investing, care about the ethical dimensions of the firms they buy. The aim is to understand the psychology of non-pecuniary preferences and how it affects firm valuations. • Project 3 is empirical. We study how informational shocks regarding a company’s environmental performance affect market forecasts of its future earnings at various time horizons. Our project in multidisciplinary in its approach: the research consortium spans skills in economic theory, data analysis, psychology.

Information asymmetries pervade economic contexts. Job applicants know their ability better than employers, entrepreneurs have more information about their projects than banks, lobbyists are better informed about the scientific consensus around their issues than politicians, food producers understand the nutritional content of their products better than consumers. Our research plan is concerned with whether and how interested parties (employees, entrepreneurs, lobbyists, producers) communicate their private information to decision makers (employers, banks, politicians, consumers). The proposal involves various and complementary projects involving approaches from game-theory, behavioral economics and industrial organization. All projects, described below, aim at studying the role of bounded rationality and complex communication channels on the dissemination of information to decision-makers and in markets. 1. Information disclosure and the protection of naive consumers. We will study theoretically and experimentally disclosure games in which firms not only decide whether to disclose verifiable information, but also enjoy substantial flexibility in how information is disclosed to unsophisticated consumers. We will also consider disclosure games in which firms have multiple noisy signals about the quality of their products and can shape their disclosure strategies as a function of consumers' naivete. 2. Bounded rationality and psychological preferences in communication games. We will develop sender-receiver communication models in which the beliefs of the decision-maker directly enter his utility function. In this new theoretical framework, we will study the robustness of the unravelling result in voluntary disclosure games. We will also incorporate psychological preferences into cheap talk games and study the value of mediation and advice. 3. Credibility of Online Information. We will analyze the credibility of online product information. Our goal is to understand how the internet platform business model modifies the strategic disclosure of product information with a particular emphasis on the role of consumers as transmitters and acquirers of such information. 4. Dynamic and competitive information design. We will analyze long and competitive information design games between multiple information designers who want to influence the final action of a decision-maker. In particular, we will study how information designers react dynamically to the information policies of their competitors. The new models and results obtained in these projects will answer a number of questions: When is information credibly revealed to decision-makers? What is the quality of information that is produced and revealed by interested parties? How does a decision-maker's sophistication and preference affect strategic information revelation and efficiency? How does the vagueness of informed parties' disclosure impact on the decisions of naive decision-makers? What is the role of communication intermediaries to advise boundedly-rational decision-makers? As a next step, we will test some of our models' positive predictions in innovative laboratory experiments. Ultimately, our research promises to result in a better understanding of the role that policies, such as mandatory disclosure laws, mediation, third-party certification and consumer education, can play in improving information transmission and decisions. Keywords. Advertising; Bayesian persuasion; behavioral economics; bounded rationality; certification; cheap talk; concavification; consumers protection; credible communication; experimental economics; giving advice; information avoidance; information unravelling; information design; intermediaries; mediation; mandatory versus voluntary disclosure; noisy information; platforms; product information disclosure; psychological games; revelation principle; search goods; splitting games; statistical experiments; stochastic games.

The proposed research project undertakes a comprehensive analysis of the role of unsystematic risk within the realm of financial markets. In contrast to prevailing conventional wisdom, which posits that only systematic risk is rewarded in financial markets, our investigation substantiates, both theoretically and empirically, that unsystematic risk harbors a discernible price of risk. Subsequently, we undertake a meticulous examination of the implications of this paradigm-shifting insight on several critical facets of financial markets, namely: (i) the cross-section of asset returns, (ii) the performance of active asset managers, (iii) the dynamic properties of asset-pricing anomalies, and (iv) the segmentation of asset markets. Our primary theoretical contribution resides in the transformation of the conventional risk-return tradeoff paradigm governing asset markets. Additionally, we provide a comprehensive framework for the accurate measurement of risk-adjusted returns. The principal empirical outcome of our analysis is the demonstration of the substantial quantitative significance associated with the compensation for unsystematic risk, a dimension heretofore ignored in the existing body of literature. These insights have far-reaching implications for portfolio choice, asset pricing, and risk management, which we study in a series of independent research papers. This research offers a substantial advancement in the understanding of financial markets and underscores the critical importance of reassessing the risk-reward tradeoff, fostering innovative perspectives, and catalyzing transformative change in the field of finance.

In this project, we will develop a behavioral economics module within the Constances epidemiological cohort in order to measure patient’s individual economic preferences toward risk, ambiguity and time. These psychological variables and the associated biases are the cornerstones of the normative and descriptive models of individual health decisions in health and behavioral economics. In WP1, we will administratively and logistically set up, implement and include an innovative behavioral economics module on individual preferences within the Constances cohort. We will conduct a web-based questionnaire to an online representative sub-sample of Constances volunteers in two waves at a one-year interval. Our aim is to collect a repeated measure of individual preferences of 5000 Constances volunteers. We will link this module to Constances survey data and medical records as well as relevant data from the French national security database (SNIRAM). We will hire specifically for this project a data manager and a data scientist (for respectively 24 and 18 months) who will prepare the dataset and preliminary statistics and will assist the scientific teams in charge of the four research projects presented hereafter. In WP2, we will investigate the evolution of individual preferences in a life course perspective and more precisely the causal and selection effects linking socioeconomic position to individual preferences (WP2.1) and the role of the patient’s health history in the evolution of individual preferences over time (WP2.2). In WP3, we will examine how individual preferences and socioeconomic indicators (SEP and economic insecurity) jointly determine individual choices of health-related behaviors in terms of primary prevention (e.g. over-eating, poor diets, lack of physical activity, smoking, alcohol abuse, drug use, sleep deprivation) and of secondary prevention (in particular for breast and cervical cancer screening) (WP 3.1) and of decisions related to pollution exposure and residential area (WP 3.2). The results of these studies will inform public policy makers on the decision making process involved in individual health-related behaviors and the social inequalities in health they can induce. Also, the unique dataset resulting from the BeHealth project will constitute a precious public good for national or international researchers in health economics, medicine, epidemiology and public health interested by the concepts developed in behavioral economics on individual preferences and deviations (or biases) from economic rationality.

Today, Europe faces a “crisis of values”. This crisis is related to the numerous challenges the European Union (“EU”) has faced in recent years – such as the sovereign debt crisis, the security crisis linked to the threat of terrorism, and the migration crisis. It has been characterized by a systemic deterioration in certain Member States of the EU’s founding values, such as democracy, the rule of law and the protection of fundamental rights. In particular, two Member States – Hungary and Poland – are experiencing a significant decline in the rule of law, which has involved the establishment of electoral autocracies that seek to undermine the limits on the exercise of executive power in order to maintain the dominant political party in power in the long term. Faced with the ineffectiveness of the political mechanisms intended to protect the rule of law in its Member States, the EU has developed a new strategy based on judicial and techno-managerial mechanisms. On the one hand, a number of preliminary references and infringement procedures that have been referred to the Court of Justice of the EU have found serious rule of law breaches in Hungary and Poland. Yet on the other hand, the EU has relied on instruments that were not specifically designed nor envisioned to protect the rule of law, such as the European Semester, the European Structural and Investment Funds, and the protection of EU’s financial interests. These mechanisms mainly pertain to the Economic and Monetary Union, cohesion policy and European fiscal policy, and rely on techno-managerial control mechanisms (indicators and scoreboards, benchmarking, peer reviews, etc.). While this new approach is likely to respond to criticisms regarding the lack of effectiveness of the Union's protection of the rule of law, it also raises some concerns. Firstly, the use of techno-managerial mechanisms is likely to undermine the constitutional balance of the Union by favouring, in particular, a management of the crisis of values by the European executive power and a marginalisation of parliamentary assemblies. Secondly, this new approach by the European Union could have the consequence that only those dimensions of the rule of law linked to economic and budgetary considerations will be effectively protected, to the detriment of other dimensions such as the rights of minorities, and thus, promote a conception of the rule of law that is not in compliance with international standards, such as those stemming from the Council of Europe. Using a pragmatic approach combined with an instrument-based approach and inductive reasoning, the MEDROI research project will critically analyse this new strategy. This has threefold-objective: (i) identify the techno-managerial control mechanisms mobilised by the EU alongside their effectiveness; (ii) analyse the consequences of this new approach for the protection of the rule of law within the EU; and (iii) assess the compatibility of this new approach by the EU with international standards for the protection of the rule of law. At the end of the two years covered by the project, MEDROI will mainly make it possible to identify the conception of the rule of law that is effectively produced by the EU through its new strategy, and to compare it with European and international standards for the protection of the rule of law; to assess the effectiveness of the protection of the rule of law in the EU; and to propose credible solutions to strengthen the protection of the rule of law in EU Member States.