The author models the links between residential choice, education, and productivity in a city composed of several communities. Local complementarities in human capital investment induce occupational segregation, although efficiency may require identical communities. Even when some asymmetry is...

Access to private information is shown to generate both the incentives and the ability to manipulate asset markets through strategically distorted.announcements. The fact that privileged information is noisy interferes with the public's attempts to learn whether such announcements are honest; it...

We develop a theory of moral behavior, individual and collective, based on a general model of identity in which people care about "who they are" and infer their own values from past choices. The model sheds light on many empirical puzzles inconsistent with earlier approaches. Identity...

This paper examines the often stated idea that the poor do not support high levels of redistribution because of the hope that they, or their offspring, may make it up the income ladder. This "prospect of upward mobility" (POUM) hypothesis is shown to be fully compatible with rational...

We analyze the value placed by rational agents on self-confidence, and the strategies employed in its pursuit. Confidence in one's abilities generally enhances motivation, making it a valuable asset for individuals with imperfect willpower. This demand for self-serving beliefs (which can also...

International surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate. At the same time, social ethnographies and experiments by psychologists demonstrate...