We model a financial market in which investor beliefs are shaped by representativeness. Investors overreact to a series of good news, because such a series is representative of a good state. A few bad news do not change investor minds because the good state is still representative, but enough...

The 2014 John Bates Clark Medal of the American Economic Association was awarded to Matthew Gentzkow of the University of Chicago Booth School of Business. The citation recognized Matt?s ?fundamental contributions to our understanding of the economic forces driving the creation of media...

Privatizing Russia offers an inside look at one of the most remarkable reforms in recent history. Having started on the back burner of Russian politics in the fall of 1991, mass privatization was completed on July 1, 1994, with two thirds of the Russian industry privately owned, a rapidly rising...

type="main" xml:lang="en" <title type="main">ABSTRACT</title> <p>Recent empirical research has identified a significant amount of volatility in stock prices that cannot easily be explained by changes in fundamentals; one interpretation is that asset prices respond not only to news but also to irrational “noise trading.”...</p>

Survey evidence suggests that many investors form beliefs about future stock market returns by extrapolating past returns. Such beliefs are hard to reconcile with existing models of the aggregate stock market. We study a consumption-based asset pricing model in which some investors form beliefs...

When should a government provide a service in-house and when should it contract out provision? The authors develop a model in which the provider can invest in improving the quality of service or reducing cost. If contracts are incomplete, the private provider has a stronger incentive to engage...