In this paper I consider a dynamically complete market model without intrinsic uncertainty. The only uncertainty is modelled by sunspots. Agents' beliefs are heterogeneous, but eventually become homogeneous in the sense that agents' beliefs are identical in the limit. I show that if some states...

We develop a dynamic model of opinion formation in social networks when the information required for learning a payoff-relevant parameter may not be at the disposal of any single agent. Individuals engage in communication with their neighbors in order to learn from their experiences. However,...

This paper shows an equivalence result between the utility functions of secular agents who abide by a moral obligation to accumulate wealth and those of religious agents who believe that salvation is immutable and preordained by God. This result formalizes Weber's renowned thesis on the...

We examine Popper's falsifiability within an economic model in which a tester hires a potential expert to produce a theory. Payments are contingent on the performance of the theory vis-a-vis data. We show that if experts are strategic, falsifiability has no power to distinguish scientific...

We study the problem of testing an expert whose theory has a learnable and predictive parametric representation, as do standard processes used in statistics. We design a test in which the expert is required to submit a date T by which he will have learned enough to deliver a sharp, testable...

In 1908 the Welsh neurologist and psychoanlayst Ernest Jones described human beings as rationalizers whose behavior is governed by "the necessity of providing an explanation." We construct a formal and testable model of rationalization in which a decision maker selects her preferred alternative...

Game-theoretic and statistical models have emphasized the desirable information aggregation properties of large elections. However, such models do not explain why voters choose to acquire costly information. In this paper we use an ethical voter model to endogenize the decision to acquire...

This paper contributes to the recent behavioral economics literature by showing that whether or not overconfidence changes qualitative predictions in asymmetric information markets may depend on the market structure itself. We first show that overconfidence may overturn fundamental relations...

We consider a dynamic general equilibrium asset pricing model with heterogeneous agents and asymmetric information. We show how agents' different methods of gathering information affect their chances of survival in the market depending upon the nature of the information and the level of noise in...

This paper describes a general principle that can be used to elicit honest opinions, even if risk attitudes are unknown. JEL Classification: D83