We develop a life-cycle model that captures "absent-mindedness": the fact that many households have only the sketchiest understanding of their pattern of spending. The model generates precautionary spending, whereby absent-minded agents tend to consume more than attentive ones. The model also...

We develop a model of state-dependent pricing that we can log-linearize and compare to the standard Calvo model. In one extreme case, money is neutral with state-dependent pricing even though the probability of price adjustment is constant as in the Calvo model. We use this example to illustrate...

Why do so few retirees purchase private annuities? Recent research suggests that bequest motives, precautionary savings motives, and actuarially-unfair pricing can explain the lack of demand for annuities. The degree to which these forces can explain the annuity puzzle depends crucially on...