We investigate a model in which one seller and one buyer trade in each of two periods. The buyer has demand for one unit of a non-durable object per period. The buyer's reservation value for the good is private information and is the same in both periods. The seller commits to prices in each of...

Evidence from IPOs show that the initial valuations of entrepreneurial ventures tend to be overvalued (Fisher 2014). One common explanation is irrationality on the part of the entrepreneur characterized by overconfidence (Galasso and Simcoe 2011). We provide a different, rational explanation...