The use of equilibrium models in economics springs from the desire for parsimonious models of economic phenomena that take human reasoning into account. This approach has been the cornerstone of modern economic theory. We explain why this is so, extolling the virtues of equilibrium theory; then...

Informal lending and savings institutions exist around the world, and often include regular door-to-door deposit collection of cash. Some banks have adopted similar services in order to expand access to banking services in areas that lack physical branches. Using a randomized control trial, we...

The paper examines the risk-return tradeoff an individual or trustee who decides to liquidate a position in an asset. Converting concentrated wealth into cash is not without risk as it may not be instantaneous. Just like the selection of an optimal asset mix along the 'efficient frontier', the...

The paper studies the impact of the portfolio constraint imposed by the consumption demand for housing (the quot;housing constraintquot;) on the household's optimal holdings of financial assets. Since the ratio of housing to net worth declines as the household accumulates wealth, the housing...

Households hold undiversified stock portfolios of firms headquartered near their city of residence. Leading explanations assign a causal role for proximity. The literature neglects that distance is endogenous. Households may locate based on unobservables such as optimism about a city's economic...

We explore how an understudied factor, portfolio composition, affects investors' trading preferences and whether it is associated with the Disposition Effect. Behavioral lab experiments reveal predictable trading patterns depending on salient holding amounts in the portfolio, and the latter's...

In the late 1990s, as economists looked back the development period in Africa since 1970s, they put forward the notion “African growth tragedy” , meaning that Africa's poor growth and resulting low income is associated with low schooling, political instability, underdeveloped financial...

This study argues that diminishing marginal impatience (DMI) as an intuitively plausible behavioural assumption of endogenous time preference has the potential for resolving important issues like the equity premium puzzle. It shows that, while applied to a model in the traditional overlapping...

Are cryptocurrency traders driven by a desire to invest in a new asset class to diversify their portfolio or are they merely seeking to increase their levels of risk? To answer this question, we use individual-level brokerage data and study their behavior in stock trading around the time they...

Microinsurers strive to simplify products and their pricing, a trend that runs counter to the customization and complex underwriting of insurance in richer markets. While necessary to reduce costs and reach wide scale, this trend opens microinsurance markets to problems of information...