We study price formation in the standard model of consumer search for differentiated products but allow for search cost heterogeneity. In doing so, we dispense with the usual assumption that all consumers search at least once in equilibrium. This allows us to analyze the manner in which prices...

In a country with weak institutional constraints on the executive, the real power might belong to the government bureaucracy rather than to an autocratic leader. We combine the Aghion-Tirole definition of formal and real authority with the Barro-Ferejohn model of political agency to study the...

Many information structures generate correlated rather than mutually independent signals, the news media being a prime example. This paper shows experimentally that in such contexts many people neglect these correlations in the updating process and treat correlated information as independent. In...

We study the influence of reason and intuition on decision making over time. Facing a sequence of similar problems, agents can either decide rationally according to expected utility theory or intuitively according to case-based decision theory. Rational decisions are more precise but create...

Using a natural voting experiment in Switzerland that encompasses a 160-year period (1848–2009), we investigate whether a higher level of complexity leads to increased reliance on expert knowledge. We find that when more referenda are held on the same day, constituents are more likely to refer...

A large part of the literature on frictional matching in the labor market assumes bilateral meetings between workers and firms. This ignores the frictions that arise when workers and firms meet in a multilateral way and cannot coordinate their application and hiring decisions. I analyze the...

This paper studies how political competition can lead candidates to strategically increase the salience of specific issues, in order to influence voting decisions of marginal groups, with non trivial consequences for turnout rates. In my setup issues differ in their divisiveness, to be defined...

Capitalism is characterized by booms and busts. Periods of strong growth in output alternate with periods of declines in economic growth. Every macro-economic theory should attempt to explain these endemic business cycle movements. In this paper I present two paradigms that attempt to explain...

Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that...

Theory of mind and individual preferences are important determinants in social decision making. The current study examined in a large sample whether being a cooperative preference type is related with better theory of mind skills. Furthermore, by testing adolescents and adults, we examined the...