Showing 1 - 10 of 57
A literal interpretation of neo-classical consumer theory suggests that the consumer solves a very complex problem. In the presence of indivisible goods, the consumer problem is NP-Hard, and it appears unlikely that it can be optimally solved by humans. An alternative approach is suggested,...
Persistent link: https://www.econbiz.de/10011196460
We propose a novel theory of self-fulfilling fluctuations in the labor market. A firm employing an additional worker generates positive externalities on other firms, because employed workers have more income to spend and have less time to shop for low prices than unemployed workers. We quantify...
Persistent link: https://www.econbiz.de/10010822899
We study the effect of menu costs on the pricing behavior of sellers and on the cross-sectional distribution of prices in the search-theoretic model of imperfect competition of Burdett and Judd (1983). We find that, when menu costs are small, the equilibrium is such that sellers follow a (Q, S,...
Persistent link: https://www.econbiz.de/10010822912
People may be surprised by noticing certain regularities that hold in existing knowledge they have had for some time. That is, they may learn without getting new factual information. We argue that this can be partly explained by computational complexity. We show that, given a database, finding a...
Persistent link: https://www.econbiz.de/10005061908
People may be surprised by noticing certain regularities that hold in existing knowledge they have had for some time. That is, they may learn without getting new factual information. We argue that this can be partly explained by computational complexity. We show that, given a knowledge base,...
Persistent link: https://www.econbiz.de/10005150211
We examine markets in which agents make investments and then match into pairs, creating surpluses that depend on their investments and that can be split between the matched agents. In general, each of the matched agents would ”own" part of the surplus in the absence of interagent transfers....
Persistent link: https://www.econbiz.de/10010822874
We study students' dropout behavior and its consequences in a dynamic signaling model. Workers pay an education cost per unit of time and cannot commit to a fixed education length. Workers face an exogenous dropout risk before graduation. Since low-productivity students' cost is high, pooling...
Persistent link: https://www.econbiz.de/10010822876
This paper demonstrates that a misspecified model of information processing interferes with long-run learning and offers an explanation for why individuals may continue to choose an inefficient action, despite sufficient public information to learn the true state. I consider a social learning...
Persistent link: https://www.econbiz.de/10010822879
We develop a theoretical framework to quantitatively assess the general equilibrium effects and welfare implications of central bank reputation and transparency. Monetary policy alternates between periods of active inflation stabilization and periods during which the emphasis on inflation...
Persistent link: https://www.econbiz.de/10010822884
We develop a DSGE model in which the policy rate signals to price setters the central bank’s view about macroeconomic developments. The model is estimated with likelihood methods on a U.S. data set that includes the Survey of Professional Forecasters as a measure of price setters’ inflation...
Persistent link: https://www.econbiz.de/10010822895