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Coordination, Fair Treatment and Inflation Persistence
Driscoll, John C.; Holden, Steinar - 2021
Most wage-contracting models with rational expectations fail to replicate the persistence in inflation observed in the data. We argue that coordination problems and multiple equilibria are the keys to explaining inflation persistence. We develop a wage-contracting model in which workers are...
Persistent link: https://www.econbiz.de/10013218081
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Inequalities in Income and Inequalities in Health
Deaton, Angus - 2021
What is inequality in health? Are economists' standard tools for measuring income inequality relevant or useful for measuring it? Does income protect health and does income inequality endanger it? I discuss two different concepts of health inequality and relate each of them to the literature on...
Persistent link: https://www.econbiz.de/10013220524
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Fairness Versus Welfare : Notes on the Pareto Principle, Preferences, and Distributive Justice
Kaplow, Louis; Shavell, Steven - 2021
In Fairness versus Welfare, we advance the thesis that social policies should be assessed based entirely on their effects on individuals' well-being. This thesis implies that no independent weight should be accorded to notions of fairness (other than many purely distributive notions). We support...
Persistent link: https://www.econbiz.de/10013232881
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Pricing When Customers Care About Fairness But Misinfer Markups
Eyster, Erik - 2017
This paper proposes a theory of price rigidity consistent with survey evidence that firms stabilize prices out of … fairness to their consumers. The theory relies on two psychological assumptions. First, customers care about the fairness of … rigid. Embedded in a simple macroeconomic model, our pricing theory produces nonneutral monetary policy, a short …
Persistent link: https://www.econbiz.de/10012948083
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The Evolution of Ideology, Fairness and Redistribution
Alesina, Alberto F. - 2010
Ideas about what is "fair" above and beyond the individual's position in the income ladder influence preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perceptions of fairness, inequality and growth are jointly determined. We...
Persistent link: https://www.econbiz.de/10013149709
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Fair Pricing
Rotemberg, Julio J. - 2021
I suppose that consumers see a firm as fair if they cannot reject the hypothesis that the firm is somewhat benevolent towards them. Consumers that can reject this hypothesis become angry, which is costly to the firm. I show that firms that wish to avoid this anger will keep their prices rigid...
Persistent link: https://www.econbiz.de/10013230827
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Pricing When Customers Care About Fairness But Misinfer Markups
Eyster, Erik; Madarasz, Kristof; Michaillat, Pascal - 2023
This paper proposes a theory of price rigidity consistent with survey evidence that firms stabilize prices out of … fairness to their consumers. The theory relies on two psychological assumptions. First, customers care about the fairness of … rigid. Embedded in a simple macroeconomic model, our pricing theory produces nonneutral monetary policy, a short …
Persistent link: https://www.econbiz.de/10014347525
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The Inefficient Markets Hypothesis : Why Financial Markets Do Not Work Well in the Real World
Farmer, Roger E. A. - 2012
Existing literature continues to be unable to offer a convincing explanation for the volatility of the stochastic discount factor in real world data. Our work provides such an explanation. We do not rely on frictions, market in completeness or transactions costs of any kind. Instead, we modify a...
Persistent link: https://www.econbiz.de/10013096129
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Insider Trading, Stochastic Liquidity and Equilibrium Prices
Collin-Dufresne, Pierre - 2012
We extend Kyle's (1985) model of insider trading to the case where liquidity provided by noise traders follows a general stochastic process. Even though the level of noise trading volatility is observable, in equilibrium, measured price impact is stochastic. If noise trading volatility is...
Persistent link: https://www.econbiz.de/10013099416
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An Intertemporal CAPM with Stochastic Volatility
Campbell, John Y. - 2012
This paper studies the pricing of volatility risk using the first-order conditions of a long-term equity investor who is content to hold the aggregate equity market rather than tilting towards value stocks and other equity portfolios that are attractive to short-term investors. We show that a...
Persistent link: https://www.econbiz.de/10013100357