Limits to arbitrage play a central role in behavioral finance. They are thought to interfere with arbitrage processes so that security prices can deviate from true values for extended periods of time. We describe a recent financial innovation that allows limits to arbitrage to be sidestepped,...

This paper examines the impact of a policy change in Tobin's tax on housing market speculators. The policy intervention effectively raised the transaction cost in the market segment with a high presence of speculators. Relative to the unaffected control sample, we find that the rise in...

This study demonstrates that taking into account heterogeneous investment horizons will improve our understanding of housing price and trading dynamics. Using an OLG (Overlapping Generations) model in which agents have heterogeneous preferences and investment horizons, with transaction costs,...

This study shows that taking into consideration heterogeneous investment horizons improves our understanding of price and trading dynamics.We develop an OLG model in which agents have heterogeneous preferences and investment horizons. With transaction costs, short term investors are more...

We exploit a policy reform that exogenously deteriorates mothers’ job prospects. China switched from a one-child policy to two-child in 2016, which increased female workers’ childbearing and caring responsibilities. Using a leading peer-to-peer lending platform targeting college students in...

In the residential housing market, home owners are reluctant to sell in a declining market. We build a model which focuses on the embedded call option associated with home ownership that allows owners to delay the (irreversible) sale. When prices are low, the (opportunity) cost of a sale, i.e.,...