Some consumers fail to observe shrouded product attributes when they buy a new product. For example, an account holder may not know their bank's fee schedule. Firms will choose high shrouded fees and compete to attract consumers with loss-leader base goods: e.g., banks will offer free gifts for...

Two prominent facts emerge from data on U.S. presidential and congressional elections. First, often people vote a split-ticket, that is, they vote for different parties' candidates for President and for Congress. Second, many citizens do not go to vote and, after going to vote, some decide to...

Previous tests of efficient risk sharing have assumed that households have identical risk preferences. This assumption is equivalent to the restriction that households can pool their resources, but cannot optimally allocate them according to individual risk preferences. In this paper, we first...

In contrast to the standard economics theory, an analysis of the Survey of Consumer Finance shows that wealthy investors have a higher return on their stocks than their poorer counterparts. The paper presents a general financial and economic theory of risk and search behavior to address the...

We construct a bilateral search model of the housing market in which agents differ in their flow rewards while searching. Buyers and sellers enter the market with high flow rewards, but move at a Poisson rate to a state with low flow rewards if they do not transact in the meantime. We...

Reputation systems have emerged as important sources of information in modern economies. This paper develops a model of reputation systems that puts buyers and sellers inside a stochastic environment involving asymmetric information and search frictions, and gives them a set of options with...

We study how a continuum of agents learn about disseminated information in a dynamic beauty contest model when they do not observe aggregate variables, such as prices or quantities, but randomly observe each other's actions. We solve for the market equilibrium and find that the average learning...

This paper addresses the output-price volatility puzzle by studying the interaction of optimal monetary policy and agents' beliefs. We assume that agents choose their information acquisition rate by minimizing a loss function that depends on expected forecast errors and information costs....