We present a theory of consumer choice that combines elements of limited recall and of allocationof attention distorted by salience. The theory helps clarify and organize a variety of evidence dealingwith consumer reaction to information, including surprises in quality and prices, unshrouding...

We present a model of shadow banking in which banks originate and trade loans, assemble them into diversified portfolios, and finance these portfolios externally with riskless debt. In this model: outside investor wealth drives the demand for riskless debt and indirectly for securitization, bank...

We present a new model of investors delegating portfolio management to professionals based on trust. Trust in the manager reduces an investor?s perception of the riskiness of a given investment, and allows managers to charge fees. Money managers compete for investor funds by setting fees, but...

We present a theory of context-dependent choice in which a consumer?s attention is drawn to salient attributes of goods, such as quality or price. An attribute is salient for a good when it stands out among the good?s attributes relative to that attribute?s average level in the choice set ðor,...

We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world?s surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and...

We present a model of stereotypes in which a decision maker assessing a group recalls only that group?s most representative or distinctive types. Stereotypes highlight differences between groups, and are especially inaccurate (consisting of unlikely, extreme types) when groups are similar....

We present a model of judicial decision making in which the judge overweights the salient facts of the case. The context of the judicial decision, which is comparative by nature, shapes which aspects of the case stand out and draw the judge's attention. By focusing judicial attention on...

We use a newly assembled sample of 1,528 regions from 83 countries to compare the speed of per capita income convergence within and across countries.  Regional growth is shaped by similar factors as national growth, such as geography and human capital.  Regional convergence rate is about 2%...