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 …

This paper quantitatively determines the asset limit in income support programs which minimizes consumption volatility … wealth. Consequently, they miss self-insurance and suffer from high consumption volatility. For an unborn, these effects are …