We study a model where households make decisions according to a dual-process framework widely used in cognitive psychology. System 1 uses effortless heuristics but is susceptible to biases and errors. System 2 uses mental effort to make more accurate decisions. Through their pricing behavior,...

As remote work opportunities expand, more people are seeking residence in foreign destinations. The resulting surge in foreign residents generates capital gains for property owners but negatively impacts renters and creates potentially important production, congestion, and amenities...

We assess the quantitative relevance of expectations-driven sovereign debt crises, focusing on the Southern European crisis of the early 2010s and the Argentine default of 2001. The source of multiplicity is the one in Calvo (1988). Key for multiplicity is an output process featuring long...

We consider an environment in which there is substantial uncertainty about the potential negative external effects of AI algorithms. We find that subjecting algorithm implementation to regulatory approval or mandating testing is insufficient to implement the social optimum. When testing costs...