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 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,...