Extending the equilibrium concepts of Kőszegi and Rabin (2006, 2007), this paper analyzes the strategic interaction of expectation-based loss-averse players. For loss-averse players with choice-acclimating expectations the utility from playing a mixed strategy is not linear but convex in the...

This paper studies how policy choice and political selection are affected by the concentration of political power -- a central aspect of political institutions. We consider a setting with inefficient policy gambles: In equilibrium, politicians choose overly risky policies in order to appear...

In the last decade, social media and the Internet have amplified the possibility to spread false information, a.k.a. fake news, which has become a serious threat to the credibility of politicians, organizations, and other decision makers. This paper proposes a framework for investigating the...

This paper studies the intermediation of auto loans through auto dealers using new and comprehensive administrative data. The arrangements between auto dealers and lenders incentivize dealers to increase loan prices. We leverage details of the corresponding contracts to demonstrate that many...