We modify the principal-agent model with moral hazard by assuming that the agent is expectation-based loss averse according to Köszegi and Rabin (2006, 2007). The optimal contract is a binary payment scheme even for a rich performance measure, where standard preferences predict a fully...

This paper characterizes optimal unemployment insurance (UI) in terms of estimable statistics in the presence of negative duration dependence for the unemployed, with endogenous callback rates generated by asymmetric information. I show how this characterization generalizes the standard...

This note explores asymmetries in the way consumers sample prices in a simple variation of Stahl's (1989) seminal model of sequential search. In the note, we characterize a unique equilibrium in which a firm that caters to more local consumers selects prices from a distribution which first order...