model, incorporating labor market frictions in the form of hiring and firing costs. We show that such a model is able to … the standard search and matching model. -- monetary persistence ; labor market ; hiring and firing costs …

predicted in Bayesian equilibrium - costs that are positively correlated lead to steeper supply functions and less competitive … outcomes than do uncorrelated costs. We find that the majority of subjects bid in accordance with the equilibrium prediction … when the environment is simple (uncorrelated costs treatment) but fail to do so in a more complex environment (positively …

within education groups, our theory helps to explain (1) rising wage inequality between groups, and (2) rising wage …

We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …