We look at the impact of a binding minimum wage on labor market outcomes and welfare distributions in a partial equilibrium model of matching and bargaining in the presence of on-the-job search. We use two different specifications of the Nash bargaining problem. In one, firms engage in a...

We present a partnership model where heterogeneous agents bargain over the gains from trade and search on the match. Frictions allow agents to extract higher rents from more productive partners, generating an endogenous preference for high types. More productive agents upgrade their partners...

We consider a model in which an informed Sender (S) makes an announcement con- cerning the quality of a project that an uninformed Receiver (R) can undertake or not. We study the role that reference dependence and loss aversion may play in affecting S? communication strategy and we show that...

In a market where sellers solicit certication to overcome adverse selection, we show that the profit of a monopolistic certifier is hump-shaped in his reputation for accuracy: a higher accuracy attracts high-quality sellers but sometimes repels low-quality sellers. As a consequence, reputational...

This paper analyzes the optimal provision of incentives in a sequential testing context. In every period the agent can acquire costly information that is relevant to the principal's decision. Neither the agent's effort nor the realizations of his signals are observable. First, we assume that the...

We study strategic information transmission in an organization consisting of an infinite sequence of individual decision makers. Each decision maker chooses an action and receives an informative but imperfect signal of the once-and-for-all realization of an unobserved state. The state affects...

I develop a model of endogenous bounded rationality due to search costs, arising implicitly from the decision problem's complexity. The decision maker is not required to know the entire structure of the problem when making choices. She can think ahead, through costly search, to reveal more of...

An urn-ball probabilistic model of the labour market is developed. Agents can be employed, (voluntary or involuntary) unemployed or entrepreneurs. The analytical long run equilibrium probabilities for each state and the matching function are derived. Then, the out-of-equilibrium dynamics are...

Most economic analyses presume that there are limited differences in the prior beliefs of individuals, an assumption most often justified by the argument that sufficient common experiences and observations will eliminate disagreements. We investigate this claim using a simple model of Bayesian...

Despite the expectations of economists that the euro changeover would have no effect on prices, we show that European consumers perceived the contrary. The data indicate that consumers based their perceptions about inflation on goods that are cheaper and more frequently purchased. We use this...