Two main school choice mechanisms have attracted the attention in the literature: Boston and deferred acceptance (DA). The question arises on the ex-ante welfare implications when the game is played by participants that vary in terms of their strategic sophistication. Abdulkadiroglu, Che and...

This essay illustrates that if Savage's small world assumption is relaxed, one can construct a theory of bounded rationality that incorporates some of the insights from recent work in cognitive psychology. The theory can be used to explain why contracts are incomplete and the existence of...

We examine an evolutionary model of preferences in a society where resources are finite. Agents who develop better strategies for bargaining and trading will grow to dominate the population. We show that successful agents will have preferences that exhibit the "endowment effect". The social...

Many people believe that prevailing commission rates for residential real estate brokers are "too high" but do not offer a formal model. This paper presents a general equilibrium model of the housing market in which real estate brokers serve as matching intermediaries. We use this model to...

This paper shows an equivalence result between the utility functions of secular agents who abide by a moral obligation to accumulate wealth and those of religious agents who believe that salvation is immutable and preordained by God. This result formalizes Weber's renowned thesis on the...