We develop a general equilibrium model of earnings, income and wealth heterogeneity in continuous time. We extend existing analytical and numerical methods to solve the model. We calibrate the model to U.S. data and find that stochastic interest rates provide a mechanism to link earnings, income...

One important feature of tax reforms, in particular corporate tax reforms, is the uncertainty surrounding them. Are they going to be permanent or are they likely to be withdrawn by the subsequent government? The expected duration of the reform is important because it affects households' economic...

We investigate the presence and stability of dynamically inconsistent time preferences across contexts with and without interpersonal trade-offs. In a longitudinal experiment subjects make a series of intertemporal allocation decisions of real-effort tasks between themselves and another person....

The firms in this model set non-binding list prices before competing for buyers by non-cooperatively granting discounts. Each firm has an incentive to set a high list price if, for example, the customers anchor their willingness-to-pay on the list price. However, list price competition occurs if...

Influenza imposes substantial costs worldwide in terms of human lives and productivity losses. Vaccination could be a cost-effective way to reduce these costs for firms and public health institutions, but low take-up rates, particularly of working adults, and vaccination unintendingly causing...

We exploit administrative data on exact commuting distances for a large sample of German employees and study the relation of commuting and wages. We find that it requires 1.5 times as much money in terms of higher wages for job changers to accept an increase of their commute as compared to their...

Experiments with the trust game reveal that people are generally more trusting and trustworthy than can be explained by profit maximizing strategies. Usual attempts to explain this social preferences. Contrary to such a view, we suggest that trust and trustworthiness depend on a specific kind of...

The maximum entropy methodology is applied to the Schelling model of urban segregation in order to obtain a reliable prediction of the stable configuration of the system without resorting to numerical simulations. We show that this approach also provides an implicit equation describing the...

This paper analyzes volatility spillovers in multivariate GARCH-type models. We show that the cross-effects between the conditional variances determine the persistence of the transmitted volatility innovations. In particular, the influence of a foreign volatility innovation on a conditional...

Investment funds are highly connected with each other, but also with the broader financial system. In this paper, we quantify potential vulnerabilities arising from funds' connectedness. While previous work exclusively focused on indirect connections (overlapping asset portfolios) between...