I show that when consumers (mis)perceive prices relative to reference prices, budgets turn out to be soft, prices tend to be lower and the average quality of goods sold decreases. These observations provide explanations for decentralized purchase decisions, for people being happy with a purchase...

In this paper, I look at the interaction between social learning and cooperative behavior. I model this using a social dilemma game with publicly observed sequential actions and asymmetric information about payoffs. I find that some informed agents in this model act, individually and without...

We model a market for highly skilled workers, such as the academic job market. The outputs of ?rm-worker matches are heterogeneous and common knowledge. Wage setting is synchronous with search: ?rms simultaneously make one personalized offer each to the worker of their choice. With large...

Do intermediate goods help explain relative and aggregate productivity differences across countries? Three observations suggest they do: (i) intermediates are relatively expensive in poor countries; (ii) goods industries demand intermediates more intensively than service industries; (iii) goods...

We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and ?managers?, each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of...

We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and managers, each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of...

This paper is an investigation into the dynamics of asset markets with adverse selection à la Akerlof (1970). The particular question asked is: can market failure at some later date precipitate market failure at an earlier date? The answer is yes: there can be “contagious illiquidity” from...

This paper analyzes the problem that an incumbent faces during the legislature when deciding how to react to popular initiatives or policy proposals coming from different sources. We argue that this potential source of electoral disadvantage that the incumbent obtains after being elected can...

We study whether the increased income uncertainty in the US over the last quarter-century had a negative impact on household welfare by looking at variability of household consumption growth. We are particularly interested in understanding the effect of greater uncertainty on the liquidity...

This paper studies bargaining and conflict under incomplete information, provides an overview and a critical account of the literature on the topic and contributes with original research. We first revise models of mechanism design and sequential bargaining that take confrontation as final....