We construct a bilateral search model of the housing market in which agents differ in their flow rewards while searching. Buyers and sellers enter the market with high flow rewards, but move at a Poisson rate to a state with low flow rewards if they do not transact in the meantime. We...

This paper offers a novel positive theory of counterfeit money, in which the counterfeiters compete against both law enforcement and innocent individuals forced to verify their currency. Law enforcement efforts against counterfeiting can crowd out verification, and thus have perverse...

The emergence of medieval markets has been seen in the literature as hampered by lack of contract enforcement and institutions like merchants’ communal responsibil-ity. Merchants traveling to a different marketplace could be held liable for debts in-curred by any merchant from their...

This paper explores wage-setting in the presence of asymmetric information. Firms know their own productivity, while workers only know the distribution of productivity in the economy. Although there is unemployment in equilibrium, the labor market is competitive in the sense of Moen (1997):...

We consider a college admissions problem with uncertainty. We realistically assume that (i) students' college application choices are nontrivial because applications are costly, (ii) college rankings of students are noisy and thus uncertain at the time of application, and (iii) matching between...

We provide a matching model where identical workers are embedded in ex-ante identical social networks. Job arrival rate is endogeneous and wages are bargained. We study the evolution of the networks with time and characterize the equilibrium distribution of unemployment rates across networks. We...

This paper extends Mortensen and Pissarides (1994) by introducing workers' risk aversion. In doing so, it provides a framework within which to study jointly the optimal supply of job security and the allocational and welfare consequences of government intervention in excess of private...