ingredient is a wedge between the cost of borrowing and the risk-free investment return. Borrowing can either raise or lower … equity demand, depending on the cost of borrowing. A borrowing rate equal to the expected return on equity - which we show … roughly matches the data - minimizes the demand for equity. Alternative models with no borrowing or limited borrowing at the …

systems involved with Theory of Mind (that is, mentalizing other agents) are similar to those involved with prospection …

relatively small part of the welfare costs of labor income risk over the life cycle. …

risk, such as expected utility theory and prospect theory. Hence, to explain the evidence suggesting that agents are … label affective or perceived risk - are endogenized. Affective decision making (ADM) is a strategic model of choice under … risk where we posit two cognitive processes - the rational and the emotional process. The two processes interact in a …

the inefficiencies that may result under fixed costs and simultaneous provision. To assess the strength of the theory we … examine the effect of announcements in both the presence and absence of fixed costs. Our findings are supportive of the theory …