Published Papers​

Noah Dormady, Adam Rose, Alfredo Roa-Henriquez & C. Blain Morin. (2022). International Journal of Production Economics.

Society is increasingly focused on resilience to catastrophic events. Firms generally observe two forms of economic disruption, property damage and business interruption (BI). In contrast to pre-event mitigation intended primarily to avoid property damage, firms can use a variety of resilience tactics once the disaster strikes to reduce BI losses by improving stability and continuity of operations. This paper makes a theoretical contribution by incorporating resilience into longstanding economic production theory and by identifying the key components for evaluating the cost and effectiveness of resilience. It also makes important empirical contributions by designing, administering and analyzing surveys of firms affected by two of the most devastating disasters in U.S. history. This paper is the first to econometrically analyze these production theory relationships, identifying the cost-effectiveness of a full range of explicit resilience tactics. Results show that BI losses exceeded property damage losses by over 900% and, on average, firms avoided $4.57 in BI for every dollar spent on resilience. Generalizable comparative static estimates are presented for the manufacturing sector to test formalized relationships, which identify that tactics capable of improving factor productivity can significantly enhance the cost-effectiveness of resilience.

Noah Dormady, Adam Rose, & C. Blain Morin. (2022). In, Skidmore, Mark (Ed.). Handbook on the Economics of Natural Disasters. Cheltenham: Edward Elgar Press.

This chapter summarizes key contributions and advances in the empirical estimation of disaster resilience. It begins by characterizing core theoretical and definitional distinctions, including reliability versus resilience, mitigation versus resilience, adaptive versus inherent resilience, and static versus dynamic resilience. It then characterizes core contextual considerations that shape empirical estimation, including unit of analysis and sector considerations. Core resilience metrics are summarized in a way that presents a straightforward mapping between metrics and contextual applications. It then provides a concise summary of key empirical advances across a wide range of empirical methodologies, with a major focus at the microeconomic level. Finally, the chapter offers an application to illustrate how these concepts establish a solid foundation for analysis by providing a synopsis of some of the authors’ own recent and ongoing research using survey-based and econometric approaches to estimate resilience cost and effectiveness metrics at the microeconomic level. 

Noah Dormady, Anthony Fasano, Alfredo Roa-Henriquez, Drew Flanagan, William Welch, & Dylan Wood. (2022). Bulletin of the American Meteorological Society (BAMS). 

This study reports on two experiments to investigate the informational determinants of hurricane evacuation decisions (temporal and spatial). Whereas most observational and experimental studies in this domain address the public’s response to forecast information, this study addresses emergency management decisions. Using a subject sample of emergency managers and other public safety leaders, contrasted with a more typical university subject pool, this study presents an experimental design that overcomes the counterfactual problem present in all prior published experiments, by relying on an actual storm (Hurricane Rita) with a known outcome. Several methodological advancements are presented, including the use of an established numeracy instrument, integration of advanced hydrodynamic forecasts, and use of a loss aversion frame to improve generalizability. Results indicate that the availability of additional forecast information (e.g., wind speed, forecast tracks) significantly increases the probability and improves the timing of early voluntary evacuation. However, we observe that more numerate subjects are less likely to avoid relying upon forecast information that is characterized by probability (e.g., the uncertainty in the forecast track, sometimes referred to as the “cone of uncertainty”). Consequently, more numerate emergency managers are almost twice as likely as less numerate ones to provide additional evacuation time to their coastal communities, and they do so by longer than a typical workday (8.8 hours). Results also indicate that subjects knowingly over-evacuate large populations when making spatial mandatory evacuation orders. However, results indicate that numeracy mitigates this effect by more than half in terms of the population subject to mandatory evacuation. 

Adam Rose & Noah Dormady (2021) In, Reggiani, A., Schintler, L.A., Czamanski, D., and Patuelli, R. (Eds.) Handbook on Entropy, Complexity and Spatial Dynamics. Cheltenham: Edward Elgar.

This chapter presents, further clarifies, and extends the foundations of economic resilience, with an eye to concerns of measurement. We examine the potential usefulness of theoretical concepts and empirical analyses in related fields such as ecology, management, regional science, and planning. We contend that there exists no single best approach to defining or measuring resilience across disciplines and that research should evolve to fit specific applications, though adhering to sound principles within each discipline. We illustrate the usefulness of our conceptual foundations in the design of an econometric analysis of economic resilience and summarize its application to survey data from two major disasters. In relation to the themes of this volume, economic resilience can serve to reduce entropy by countering the disarray in an economy in the aftermath of a disaster. At the microeconomic level, this also intersects with complexity in terms of synergies within an individual firm, and at the macroeconomic level manifests itself most notably through supply-chain interactions and network effects. In terms of spatial dynamics, it relates to geographic shifts in the location of economic activity by actual physical relocation of businesses, shifts of activity to branch plants, and the rebalancing of trade across regions.

Noah Dormady, Robert G​reenbaum, & Kim Young (2021) Environment, Systems and Decisions

Given the growing prevalence of catastrophic events and health epidemics, policymakers are increasingly searching for effective strategies to encourage firms to invest in resilience rather than relying on insurance or government assistance. Too often, however, resilience research focuses on decisions made by firms and emergency planners in the context of “one-off” events. We extend this research by examining resilience decision making in the more realistic context of repeated catastrophic events. Using a population of professional managers of middle market firms and a university experimental economics subject pool, we conduct a series of controlled experiments on the decision to invest in inventories to improve firm resilience to repeated catastrophic events. While existing economic and supply chain resilience research has focused on resilience in terms of avoiding some magnitude of economic losses, existing research omits a focus on the probability of those losses. Controlled experiments can evaluate the influence of probability more effectively than observational data by better controlling for magnitude and more easily accounting for repeated events. We find that decision makers are less likely to make resilience investments when a disaster has recently occurred. We further find that advisory information alone is insufficient to motivate resilience investments by firms. It must be substantiated by a history of advisory accuracy. However, we find that this effect is heavily moderated by the type of advisory information provided; we find that firm managers are much more likely to trust precautionary advice.

Noah Dormady, Robert Greenbaum, & Kim Young (2021) Natural Hazards Review

     Editor's Choice Collection

This paper reports on a series of controlled human-subjects experiments on the decision of firms to invest in resilience to mitigate supply-chain disruptions and their willingness to pay for advisory information to improve resilience planning investments. Here we focus specifically on strategic inventories, which have been identified in the supply chain and economic resilience literatures to be a core resilience-building tactic. Of critical importance to organizations like the Department of Homeland Security (DHS) and state and county offices of emergency management, we find that firms are willing to pay for external resi​lience information when they operate in information-poor environments. We also find that when firms purchase resilience information, they are less susceptible to the decision-making bias known as the gambler’s fallacy, which has been shown to adversely affect firms operating in repeated disaster environments. This paper is one of the first of its kind to conduct experimental analysis on a national subject population of CEOs and COOs in the context of resilience. The results inform resilience planning efforts for public- and private-sector firms and organizations, with broad implications for the use of informational policy instruments to build economic resilience.

Mehrzad Rahimi; Abdollah Shafieezadeh; Dylan Wood; Ethan J. Kubatko; Noah C. Dormady (2019) Engineering Geology

Bayesian techniques – widely used to update the distributions of involved uncertain system variables based on new observations at different points in space and time – can be highly demanding and prohibitive in cases of sophisticated computational models. Here, we propose a highly efficient Bayesian updating framework that is integrated with multivariate Kriging surrogate modeling to quantify heteroscedastic uncertainties in the entire space of uncertain system variables and capture spatial and temporal dependencies among the responses using non-separable covariance structure. The advantages of the proposed framework are demonstrated on three geological and geotechnical examples, since geological properties are often highly uncertain and responses in these systems are frequently multivariate in nature. Results indicate that the developed framework is able to accurately and efficiently update uncertainties of system variables compared to existing Bayesian updating methods that are based on surrogate models. Moreover, considering the often-neglected spatiotemporal dependencies between responses is observed to noticeably enhance the accuracy of predictions. The proposed approach serves as an efficient tool to optimally utilize monitoring data from geological and geotechnical systems to arrive at reliable predictions of future responses.

Noah Dormady, Douglas Jones, Brian Roe, & Guy Rub (2019) Utilities Policy

U.S. colleges and universities have for some time joined the privatization movement where university functions and assets are turned over to private contractors under concession agreements. Here we present a case of a 50-year comprehensive energy management agreement by The Ohio Sta​te University that generated an up-front concession payment to the university exceeding a billion dollars. The agreement, with many principles and design practices borrowed directly from public utility regulation and against the backdrop of the literature on privatization and contract theory, provides an insightful case that informs all three literatures, as well as future privatization efforts by universities.

Noah Dormady (2019 Q3) IAEE Energy Forum

Noah Dormady discusses how auction rules and mechanisms can influence the efficiency of auctions. He provides a concise summary of recently-published research on carbon auctions with a focus on California’s consignment mechanism, noting that the consignment mechanism has been observed to distort auction efficiency.

Noah Dormady & P.J. Healy (2019) J. of Commodity Markets

Unlike other auction-based carbon emission markets, California's carbon market (AB32) utilizes a consignment auction design in which utilities are allocated a share of emissions permits that they must sell into the uniform-price auction. Auction revenue is returned to the consignee, which creates an incentive to increase the auction clearing price through strategic bidding. In a numerical example, we identify the incentive that consignees have to overstate their quantity demanded in the auction, since this increases the probability that the auction clears at a higher price. This results in inefficient allocations and inflated auction prices. We test this effect through a series of laboratory experiments and confirm these predictions. Findings indicate that short-run firm profits are lower in a consignment auction than in a non-consignment auction market, and that firms are more likely to not receive the quantity of permits they need for program compliance in the auction. We conclude with implications for the design and modification of future Coasian markets.

Noah Dormady, Matthew Hoyt, Alfredo Roa-Henriquez, & William Welch (2019) The Energy Journal

Retail electric deregulation has been identified in the literature to have favorable price impacts to businesses and households because of the introduction of competition into rate-setting. Those studies often ignore the important role of regulatory intervention. They are also generally national or multi-state aggregated studies that ignore state- and utility-specific dynamics, and most rely on Energy Information Administration (EIA) price data that does not account for riders and surcharges on consumer bills, which can total more than 60 percent of bills. Using a unique panel of representative, complete electricity bill data from the Public Utilities Commission of Ohio (PUCO), this paper provides a multi-utility panel regression analysis of the effect of retail deregulation on total electric bills in Ohio. The results identify two main sources of cross-subsidization that have generally cancelled out the favorable effects of restructuring. Both types of cross-subsidies result in substantial burden shifts to residential consumers.

Noah Dormady, Zhongnan Jiang, & Matthew Hoyt (2019) J. Public Policy

Empirical support for the purported benefits of retail electric deregulation is mixed at best. Prior studies that identify states as simply “retail deregulated” overlook complex policy environments in which deregulation is implemented by regulators with a high degree of discretion. Prior studies also rely on Energy Information Administration data that do not account for core regulatory interventions that can take place during the process of implementing deregulation. Using robust time series household final bill survey data from the Public Utilities Commission of Ohio, this article provides a quasi-experimental analysis of the price impacts of retail electric restructuring in Ohio. The results suggest that residential electricity prices have increased following retail restructuring in all service territories in Ohio, with significant favourable welfare effects observed only in the Cincinnati area, where key policy implementation stages were not circumvented.

Noah Dormady, Adam Rose, Heather Rosoff, & Alfredo Roa-Henriquez (2019). In, Ruth, M., & Reisemann, S.G. (Eds). Handbook on Resilience of Socio-Technical Systems. Cheltenham: Edward Elgar.

The chapter provides a methodology for measuring the cost-effectiveness of resilience to disasters. Whereas the vast majority of extant literature in the resilience field focuses on regional and community resilience, this work extends prior work by the authors on microeconomic (i.e., firm-level) resilience and its measurement. Firm-level resilience actions, or tactics, are identified and described within an established economic resilience framework (Rose, 2017: Dormady et al., 2017). A survey-based approach is presented with an explicit application to businesses impacted by Superstorm Sandy in the NY and NJ coastal areas. A small sample demonstration of resilience cost-effectiveness results is presented in the form of statistical cost curves. The chapter concludes with a discussion of both methodological and public policy applications of the approach.

Noah Dormady, Alfredo Roa-Henriquez, & Adam Rose (2019) International Journal of Production Economics

As a result of catastrophic events, firms and other organizations are faced with input shortages and price shocks. Firms can respond to these events using a variety of “resilience” actions, or tactics. Here we provide a microeconomic foundation for analyzing a comprehensive range of these tactics, incorporating both inherent and adaptive concepts of resilience. We classify these tactics and derive optimality conditions for production with the use of each class of resilience in the context of a nested Constant Elasticity of Substitution (CES) function consisting of aggregated Capital (K), Labor (L), Infrastructure (I), and Materials (M). The framework has broad applicability, including measurement and scoring of resilience toward the development of resilience indices and the application of cost-benefit analysis.

Adam Rose & Noah Dormady (2018) International Risk Governance Council (IRGC) Vol (2). Resource Guide on Resilience: Domains of Resilience for Complex Interconnected Systems in Transition

This chapter places into the broader context of an analytical framework recent research findings and policy initiatives relating to dynamic economic resilience, which is usually defined as speeding up and/or shortening the duration of recovery from disasters. Our purpose is to offer insights into the operation and implications of both of these innovations. The first pertains to research that indicates that accelerating the pace of economic recovery has much greater potential for reducing disaster losses than does compressing its duration. The second pertains to supplementing the constructing and protecting of the built environment with the resilience strategy of embedding ways of repairing and reconstructing it more quickly in the aftermath of a disaster.

Noah Dormady & Ryan Ellis (2018) Current Sustainable/Renewable Energy Reports, Special Issue: Energy Markets

This paper examines the governance challenges of inter-sectoral critical infrastructure interdependencies. Between 2015 and 2017, the U.S. Department of Homeland Security (DHS) supported a team of researchers at Northeastern University and The Ohio State University to evaluate critical infrastructure interdependencies between the energy and transportation sectors in the context of a potential hurricane event in the Boston-metro region. The paper reports on two-years of semi-structured interviews with key stakeholders and infrastructure operators. The results provide insights gained from the interviews and a workshop convened jointly by Northeastern University, the Boston Mayor’s Office of Emergency Management, and the Massachusetts Emergency Management Agency. It identifies a number of important constraints that undermine critical infrastructure resilience. At its core, infrastructure resilience is less a question of managerial desire or skill, or technical resources or design, but is a larger institutional challenge. The institutional environment in which energy and transportation infrastructure operates ultimately informs and defines resilience efforts.

Kim Young, Robert Greenbaum, & Noah Dormady (2017) International Journal of Disaster Risk Reduction

Increasing sensitivity to terrorism, economic volatility, frequent and severe natural disasters, and infrastructure disruptions has intensified interest in resilience, the ability to withstand or recover from catastrophe. The growing research on disaster preparedness and recovery policies have been aggregate-level analyses focusing on communities, organizations, or the physical environments. Absent from this literature is an exploration of the role of individual decision-makers in determining the resilience strategies of firms, even though the hardiness of business is crucial to maintaining robust local, regional, and global economies. To address this, our research uses a randomized controlled experimental design to examine whether biological sex or gender diversity might lead to decision-making that improves investments in resilience to calamitous events. We study decisions related to a core resilience strategy, investment in inventories, across professional manager and student subject pools. We find that although females perceive a higher probability of a catastrophic event, male and female subjects do not make different investment decisions when faced with uncertainty and risk. Importantly, a gender construct capturing congruence with feminine personality attributes does correspond with increased resilience investment and is driven by differences between managers and students. Increased gender diversity in decision-making bodies may serve to improve economic resilience of firms and other organizations.

Noah Dormady (2017) The Electricity Journal

Ohio’s recent experience with three multi-billion dollar power purchase agreement (PPA) cases raises new questions about the role of public utilities commissions in deregulated markets. The PPA proposals would have effectively re-regulated utility’s generation businesses, guaranteeing returns on their generation units operating in a deregulated market. This paper provides a concise summary of the core arguments of proponents, and analyzes the adverse effects of the proposals on both wholesale and retail electricity markets.

Noah Dormady, Zhongnan Jiang, & Matthew Hoyt (2017) John Glenn College Policy Brief

Policy brief summarizing recent research on the impacts of de-regulation on residential customers in Ohio.

Aaron Clark-Ginsburg, Rebecca Slayton, Noah Dormady & Ryan Ellis (2017) ICS CERT

Short paper on the role of PUCs in building cyber-resilience.

Noah Dormady (2016) Energies

State and regional governments in the U.S. and abroad are looking to market-based approaches to mitigating greenhouse gas emissions from the electric sector, and in the U.S. as a compliance approach to meeting the aggressive targets of the Environmental Protection Agency (EPA)’s Clean Power Plan. Auction-based approaches, like those used in the Northeast U.S. and California, are both recommended strategies under the Plan and attractive to state governments because they can generate significant revenue from the sale of emissions permits. However, given the nature of imperfect competition in existing electricity markets, particularly at the state and regional level, the issue of market power is a concern at the forefront. This paper provides the results from a controlled laboratory experiment of an auction-based emissions market in the electricity sector. The results show that government revenue from auctioning emissions permits is substantially lower when market concentration is only moderately increased. The results hold significant implications for states and other subnational governments that have high revenue expectations from the auctioning of emissions permits.

Noah Dormady & Gabe Englander (2016) Journal of Public Policy

The efficient use of market-based policy instruments is an area of increasing importance as scholars and policymakers work to balance effective climate policy with economic growth. Carbon allowances and carbon offsets, despite being statutorily substitutable, behave in practice like imperfect substitutes. This paper provides a synthesis of extant work, market data and the regulatory frameworks of the world’s major carbon markets, and provides a comprehensive assessment of the drivers of demand for carbon offsets. It also provides a detailed assessment of the process through which international carbon offsets are produced, the UN’s Clean Development Mechanism. Demand for carbon offsets is heavily influenced by key programme design parameters that are specific to carbon market design and its implementation. These design parameters heavily influence the degree to which transaction costs, regulatory uncertainty and risk factor into the decisions of firms operating within the carbon trading programme. This paper also identifies key extra-statutory drivers that are outside of the policymaker’s control, which should be considered in both the policy design and the implementation process. This paper provides an instructive set of guiding criteria for policymakers and scholars for the design of future market-based environmental policy.

Dan Wei, Noah Dormady, & Adam Rose (2015) Journal of Sustainable Energy Engineering

Since 2000, more than thirty-five states have or are developing comprehensive plans to mitigate greenhouse gas (GHG) emissions and to achieve related public policy goals. Most State Climate Action Plans include detailed micro-level analyses of the mitigation policy options focusing on the direct costs/savings associated with the implementation of the options. Estimation of the macroeconomic impacts of a policy on future employment and income typically requires the use of sophisticated modeling tools, whose application is often costly and time-consuming, and thus is often prohibitive at an early phase of the policy evaluation process. In this paper, we develop reduced form statistical models that can be used to quickly and relatively inexpensively predict the likely macroeconomic impacts of various climate mitigation options. The regression models are built based on the macroeconomic modeling results of 92 GHG mitigation policy options across four major states in the U.S.

Noah Dormady (2014) Energy Economics

This paper provides an experimental analysis of a simultaneous energy-emissions market under conditions of market power. The experimental design employs real-world institutional features; including stochastic demand, permit banking, inter-temporal (multi-round) dynamics, a tightening cap, and resale. The results suggest that dominant firms can utilize energy-emissions market linkages to simultaneously inflate the price of energy and suppress the price of emissions allowances. Whereas under prior market designs, regulators were concerned with dominant firms exercising their market power over the emissions market to exclude rivals and manipulate the permit market by hoarding permits; the results of this paper suggest that this strategy is less profitable to dominant firms in contemporary auction-based markets than strategic capacity withholding in the energy market and associated demand reduction in the emissions market.

Noah Dormady, Tom Szelazek, & Adam Rose (2014) Risk Analysis

This paper provides a methodology for the economic analysis of the potential consequences of a simulated anthrax terrorism attack on real estate within the Seattle Metropolitan Area. We estimate spatially-disaggregated impacts on median sales price of residential housing within the Seattle Metro Area following an attack on the Central Business District. Using a combination of longitudinal panel regression and GIS analysis, we find that the median sales price in the CBD could decline by as much as $280,000, and by nearly $100,000 in nearby communities. These results indicate that total residential property values could decrease by over $50 billion for Seattle, or a 33 percent overall decline. We combine these estimates with HUD’s 2009 American Housing Survey (AHS) to further predict 70,000 foreclosures in Seattle spatial zones following the terrorism event.

Noah Dormady (2013) Energy Policy

Recent greenhouse gas auctions have resulted in base level prices while remaining significantly concentrated. How do dominant firms receive such a large share of emissions allowances without bidding up the market price? This paper provides a Monte Carlo simulation analysis based on a contemporary regional greenhouse gas market in the United States. It introduces a C# simulation software environment, Oligopsony 1.0 that simulates uniform-price emissions auctions in repeated iterations. The results of these simulations indicate that there can be significant non-linearities between profit and market power as exercised through strategic demand reduction. This analysis finds the optimum point of strategic demand reduction that enables firms to exploit these non-linearities. The use of auctions to distribute tradeable pollution rights to firms in heavily concentrated markets can have significant unintended consequences, as it can exacerbate the problems of market power that exist within those markets.

Cheryl Roberto & Noah Dormady (2013) John Glenn School Policy Brief

Policy brief relating to Ohio's energy efficiency law, SB 221.


Cleveland Plain Dealer

Noah Dormady (2013) Administration & Society

This paper provides a theoretical framework to advance our understanding of collaborative organization through integrating extant theories of political economy. Eight propositions are advanced from theories of rent seeking, commodification, administrative capture, cartelization, transparency, risk, institutional logic, and transaction cost. These propositions are applied to a recent multi-sectoral collaborative, the Regional Greenhouse Gas Initiative. Because of the innate diversity that exists among institutions, collaborative organization constitutes a hybrid organizational form through which regulatory penumbras, or gray areas, emerge. Political economic conditions can arise in these penumbral areas, as they offer organizations the opportunity to operate within diminished regulatory environments.

Adam Rose, Dan Wei & Noah Dormady (2011) Regional Science Policy and Practice

The Pennsylvania Climate Action Plan (CAP) is the culmination of a formal stakeholder process to specify policies and measures to mitigate emissions of greenhouse gases (GHGs). The implementation of technical and behavioural mitigation options will require changes in the way businesses and government operate, and the way households conduct their daily lives. An important question is whether the sum of all of these microeconomic changes and their interactions will be a stimulus to or a drain on the economy as whole. We apply the Regional Economic Models, Inc. Policy Insight Plus (REMI PI+) model in an innovative manner to analyse the impacts of major GHG mitigation options at the macroeconomic level in Pennsylvania for the policy horizon of 2009–2020. Our results indicate that the net impacts on the state's economy will be significantly positive. We also develop a reduced form econometric model based on the results and subject it to rigorous statistical testing. This is the first time an independent validation of this kind has been applied to the REMI Model in order to verify its simulation results.

Adam Rose & Noah Dormady (2011) The Energy Journal

This paper provides a meta-analysis of a broad set of recent studies of the economic impacts of climate change mitigation policies. It evaluates the influences of the impacts of causal factors, key economic assumptions and macroeconomic linkages on the outcome of these studies. A quantile regression analysis is also performed on the meta sample, to evaluate the robustness of those key factors throughout the full range of macro findings. Results of these analyses suggest that study results are strongly driven by data inputs, economic assumptions and modeling approaches. However, they are sometimes affected in counterintuitive ways.

Working Papers​

The moderating effect of expert perception on resilience investment decisions

Matthew Pesavento, Robert Greenbaum, & Noah Dormady (working paper)​

The Coronavirus pandemic of 2019-2020 (COVID-19) has been characterized, amongst other things, by conflicting information by professional advisors, often leaving decision makers confused about how to proceed in a way that minimizes risk without placing unneeded burden on individuals and businesses. We use the results from a controlled simulation of professional managers and students to analyze the effect that the perception of an advisor has on a firm’s profits amidst an uncertain disaster scenario. Our analysis finds that those individuals who have more pronounced perceptions of advisors have different decision-making patterns than individuals who value the perception of advisors less, suggesting that the perception of the advisor is a significant and overlooked factor in the literature. Ultimately, we directly relate these differences in advisor perception to profit through Monte Carlo simulation. We find evidence that as much as seven percent of the profit outcomes are explained by the value that a decision maker places on the perception of the advisor, all else equal. We contribute to coronavirus discussion in three ways: First, we offer a formal mechanism as to why individuals faced with the same situation make different decisions. Second, we introduce a phenomenon that up to this point, to our knowledge, has not been formally articulated in an empirical manner, namely that advisor perception statistically influences an individual’s likelihood to invest in economic resilience in an uncertain disaster scenario. The same advice coming from two experts can have dramatically different effects based solely on how the decision maker perceives the experts. Finally, we find qualitative differences in the way that advice is perceived between laypeople and professionals, suggesting that a one-size-fits-all strategy is inefficient in terms of advice-giving. Instead, a better tailoring of the guidance merely through how it is conveyed can have substantial economic impacts.