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We provide a preference-based rationale for endogenous overconfidence. Horizon-dependent risk aversion, combined with a possibility to forget, can generate overconfidence and excessive risk taking in equilibrium. An "anxiety prone" agent, who is more risk-averse to imminent than to distant...
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Empirical evidence illustrates that diversity generates both economic costs and benefits. This paper develops a … demonstrates that the direct effects of diversity can be positive or negative, and depend upon the size of fixed parameter values …. Second, diversity also influences individuals' location decisions. Segregation (variation of diversity across regions) always …
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