A firm deciding on its promotion practices will be concerned both with the efficient assignment of workers to tasks and with rewarding prior performance. This can result in a time-inconsistency problem because the promotion rule that is optimal at the time of the promotion decision may differ...

This paper investigates the relationship between the way rational expectations is employed in practice and the argument initially put forth to justify its use. In practice, rational expectations has meant that the expectations of each agent taken separately is consistent with the predictions of...

A number of studies have employed strategic complementarity to show that many features of the Keynesian framework can be captured in models consistent with the microfoundations approach. The authors argue that strategic complementarity is an important factor in understanding why an economy may...