Model-free and Model-based Learning as Joint Drivers of Investor Behavior

We are grateful to Andrew Caplin, Alex Chinco, Cary Frydman, Xavier Gabaix, Alex Imas, Chen Lian, Stefan Nagel, Elise Payzan-LeNestour, Indira Puri, Antonio Rangel, Josh Schwartzstein, Andrei Shleifer, Michael Woodford, and seminar participants at Caltech, Columbia University, Cornell University, Harvard University, Imperial College London, the University of California Los Angeles, the University of Chicago, the University of Pennsylvania, Washington University, Yale University, the AFA Annual Meeting and the NBER Behavioral Finance conference for very useful feedback. We are also grateful to Colin Camerer, Nathaniel Daw, Peter Dayan, Sam Gershman, John O'Doherty, and members of their lab groups for very helpful discussions about the psychological concepts in the paper. Steven Ma provided excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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• March 30, 2023