Claire Shi

Welcome!

I am a fifth year Ph.D. student in Business Economics at Harvard (expected graduation in May 2027). I earned my A.B. in Applied Mathematics/Economics, summa cum laude from Harvard College in 2021.

My research areas are in household finance, public finance, and behavioral economics. I am an NBER graduate fellow in consumer financial management, grateful to be supported by the Institute of Consumer Money Management. I'm also affiliated with Opportunity Insights and the Center for History and Economics at Harvard.

My CV is here.

Working Papers

Risk-Seeking Motives and Speculative Investment, with Costas Arkolakis, Spencer Kwon, Dominic Russel, and Hyunjoo Yang

First version: Nov 2025.

[Latest Draft]

Why do some individuals make high-risk financial investments? Using millions of linked records from Korea's leading credit bureau, telecom provider, and credit card company, we study the determinants and consequences of speculative activity. We classify explanations for high-risk financial behaviors into two types: those that overcome risk aversion, either through optimistic beliefs or desire for entertainment, and those driven by risk-seeking preferences, endogenously generated from desperation or aspirational motives (à la Friedman and Savage, 1948). Consistent with true risk-seeking motives, crypto app usage is higher among individuals with more unsecured debt, higher spending, and fewer assets, and rises after unemployment and new borrowing. Crypto app usage is also disproportionately concentrated among young and early-middle-aged men. Crypto speculation carries consequences: among crypto users, bitcoin price drops lead to lower consumption and increased delinquency, while a price boom is followed by increases in homeownership. Survey data show that crypto holders are more risk-seeking in choice tasks and more optimistic in their beliefs about crypto returns. In a stylized model, we show that when households are both risk-seeking and overoptimistic, risk-seeking preferences can amplify the negative effects of overoptimism.

Behavioral Cross-Selling: Evidence from Retail Credit Cards, with Sarah Robinson and Dominic Russel

First version: Sep 2025.

[Latest Draft] [Rewards Data]

Why do some non-financial firms rely on revenue from consumer financial products? At several large U.S. retailers, direct revenues from credit card partnerships exceed total operating income. This paper proposes a theory of behavioral cross-selling, in which firms use their access to customers to cross-sell products that capitalize on behavioral biases, such as inattention or forgetfulness. We test our theory in the retail credit card market using data from a major credit bureau. Although retail cards account for only 17% of balances in our sample, they generate 45% of missed minimum payments, triggering late fees. Liquidity constraints cannot fully explain missed minimums: among individuals with multiple cards, nearly half of missed payments on retail cards could have been avoided by reallocating excess payments from other cards. Consistent with the theory, firms in locations with more avoidable missed payments are more likely to offer retail cards and provide larger sign-up incentives. We discuss how behavioral cross-selling can help explain practices in industries such as airlines, auto dealerships, tax preparation services, and sports entertainment.

The Supply Side of Consumer Debt Repayment, with Justin Katz and Dominic Russel

First version: Nov 2024.

[Latest Draft]

Minimum payments on credit card debt allow consumers to repay slowly: despite being unsecured, the average $7,000 balance generally amortizes in over 20 years. We study how lenders choose these minimum payments and the impacts of these choices on equilibrium consumer debt outcomes. When short-term illiquidity makes many borrowers unable to make higher payments, lenders set low minimums to limit default costs. Alternatively, if many borrowers make near-minimum payments for reasons besides illiquidity (e.g., due to anchoring), lenders set low minimums to generate interest revenue. To separate these two forces, we use payment-level data from a credit bureau to document a new fact about intra-temporal debt repayment. Consumers often revolve high-interest credit card debt while making excess payments on low-interest installment debt, providing evidence that low payments aren't solely liquidity-driven. We use this fact to estimate an empirical model that predicts realistically low lender minimums. The model suggests that without anchoring, minimums would be over twice as high for most borrowers. Lenders amplify consumer biases, accounting for 20% of the total increase in credit card debt and 85% of defaults from anchoring in our model.

Revenue-Based Financing, with Dominic Russel and Rowan Clarke

Reject & Resubmit at Review of Financial Studies. First version: Nov 2023, updated: Oct 2025.

[Latest Draft]

We study revenue-based financing, an emerging capital source for small firms in low- and middle-income countries. Using transaction-level data from a South African payment platform, we show firms that take financing process 16% less revenue through the platform than observably similar non-takers after eight months, slowing repayment. Two natural experiments show this reflects moral hazard from firms diverting revenue and adverse selection. Repayment improves when firms use the platform’s other services (e.g., inventory management tools), and screening improves with longer histories and repeat financing. Our results highlight the frictions with flexible repayment models in developing economies, and how providers mitigate them.

Resting Papers

A Story of Human Capital: Why the Paycheck Protection Program Had Huge Geographic Disparities

Undergraduate thesis, awarded the Dunlop Prize in Business and Government and the Thomas Temple Hoopes Prize at Harvard College.

[2021, Paper]

This thesis studies the Paycheck Protection Program (PPP)—a 660 billion dollar small business loan program enacted in April 2020 in response to the COVID-19 pandemic. The majority of small businesses could apply for (and receive) a forgivable loan, but I find that PPP uptake differs dramatically across space. To study this geographic variation, I first present a theoretical framework for PPP. One key prediction is that even though supply-side barriers limited PPP uptake in places that had weak banking relationships in the first round, business human capital should have been able to substitute for bank human capital during the second round. Second, I use a combination of county and firm-level data to demonstrate that in line with theory, places that received very little PPP overall had both low bank and low business human capital. Finally, factors such as COVID-19 impact or political attitudes were not key determinants in predicting PPP uptake. Consequently, even though PPP was designed for COVID-19, the distribution of PPP loans was fundamentally about human capital and institutions rather than pandemic impact.

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