Money illusion means that people behave differently when the same objective situation is represented in nominal or in real terms. To examine the behavioral impact of money illusion we studied the adjustment process of nominal prices after a fully anticipated negative nominal shock in an...

Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inefficient equilibrium; however, if we lift the veil of money by...

The expression "cash-for-votes" describes a form of vote buying in which candidates for office pay individuals in exchange for their votes. That practice undermines the functioning of democracy but is pervasive in many parts of the world, especially in the Global South. We discuss estimates of...