Behavioral economists have recently put forth a theoretical explanation for the equity premium puzzle based on combining myopia and loss aversion. Complementing the behavioral theory is evidence from laboratory experiments, which provide strong empirical support consistent with myopic loss...

The Great Recession was a deep downturn with long-lasting effects on credit markets, labor markets and output. While narratives about what caused the recession abound, the persistence of GDP below its pre-crisis trend is puzzling. We propose a simple persistence mechanism that can be easily...

Deferred Acceptance (DA), a widely implemented algorithm, is meant to improve allocations: under classical preferences, it induces preference-concordant rankings. However, recent evidence shows that--in both real, large-stakes applications and experiments--participants frequently play seemingly...

Riskless interest rates fell in the wake of the financial crisis and have remained low. We explore a simple explanation: This recession was perceived as an extremely unlikely event before 2007. Observing such an episode led all agents to re-assess macro risk, in particular, the probability of...

How accurate are older people's expectations about their future Social Security benefits? Using panel data from the Health and Retirement Study, we compare respondents' observed Social Security claiming ages and benefits with subjective expectations provided during their 50s and early 60s. We...

Matched transaction-level, credit-registry, and survey-based data reveal that consumers on average form excessively high (low) income expectations relative to ex-post realizations after unexpected positive (negative) income shocks. These extrapolative income expectations lead consumers to...

We investigate the short- and long-term effects of a natural gas boom in an economy where energy can be produced with coal, natural gas, or clean sources and the direction of technology is endogenous. In the short run, a natural gas boom reduces carbon emissions by inducing substitution away...

We model how an increase in Work-from-Home (WFH) productivity differentially affects workers using a framework in which some workers cannot work offsite, some are hybrid, and some are completely remote. The improvement in WFH productivity increases housing demand and thus housing prices since...

What are the long-run effects of permanent changes to the economy? We characterize long-run comparative statics for a broad class of models in terms of expenditure shares, substitution elasticities, and capital supply elasticities. Our key insight is that long-run analysis can be performed using...

This paper draws on cross-country census data to study how agricultural productivity gaps have evolved over the last four decades. We find little tendency for gaps to decline on average despite global decreases in agricultural employment shares. We analyze the dynamics of agricultural...