The efficient market hypothesis predicts that asset prices reflect all available information. Recent experimental work found the rational expectation model to outperform the prior information model in contingent claim markets when traders hold homogeneous values, despite the no trade...

We extend and apply salience theory to choices over lotteries with multiple dimensions, such as insurance plans with deductibles and premiums, or monetary and non-monetary rewards. This extension can explain empirically observed dominated choices with large welfare costs to consumers (the...

The existence of lawsuits providing plaintiffs a negative expected value (NEV) at trial has important theoretical implications for signaling models of litigation. The signaling equilibrium possible absent NEV suits breaks down with NEV suits because plaintiffs do not have a credible threat to...