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...

In this paper, we analyze the problem of store design when consumers have preferences with temptation and self-control, as introduced by Gul and Pesendorfer (2001). We say that a monopolist designs its stores when it chooses the number of stores to open and the quality and price of the goods to...

This paper shows how expectations-driven contagion of currency crises can arise even if the currency market has a unique equilibrium when viewed in isolation. The model of Morris and Shin (1998) is extended to allow speculators to trade in a second currency market. If speculators believe that a...

We consider a college admissions problem with uncertainty. We realistically assume that (i) students' college application choices are nontrivial because applications are costly, (ii) college rankings of students are noisy and thus uncertain at the time of application, and (iii) matching between...

In the canonical learning model, the multi-armed bandit with independent arms, a decision maker learns about the different alternatives only through his private experience. It is well known that any optimal experimentation strategy for this problem is ex-post inefficient: it sometimes leads the...

Asset markets are characterized by slow booms and sudden crashes. Lending rates, for example, are more likely to experience big jumps rather than big drops. We focus on the comparison of this pattern across countries. First, we document that lending rates are more asymmetric on economies with...

This paper analyzes the equilibrium trading strategies of informed traders in the presence of market closures defined as periodic predictable stops of trading. We construct a dynamic auction model based on rational strategic behavior with asymmetric information across the agents. Empirical...

We introduce learning based on genetic algorithms in a principal-agent model of optimal contracting under moral hazard. Applications of this setting abound in finance (credit under moral hazard), public finance (optimal taxation, information-constrained insurance), development (sharecropping),...

We analyze a version of Akerlof's market for lemons in which a sequence of buyers make offers to a long-lived seller endowed with a single unit for sale. We consider both the case in which previous offers are observable and the case in which they are not. When offers are observable, trade may...