A decision maker, named Alice, wants to know if an expert has significant information about payoff-relevant probabilities of future events. The expert, named Bob, either knows this probability almost perfectly or knows nothing about it. Hence, both Alice and the uninformed expert face...

In 1908 the Welsh neurologist and psychoanlayst Ernest Jones described human beings as rationalizers whose behavior is governed by "the necessity of providing an explanation." We construct a formal and testable model of rationalization in which a decision maker selects her preferred alternative...

We consider a contracting problem between a principal who wants to be informed about relevant stochastic processes and an expert who claims to know which process will generate the data. The data generating process is known to belong to a given class.

Hume (1748) challenged the idea that a general claim (e.g. "all swans are white") can be validated by empirical evidence, no matter how compelling. We examine this issue from the perspective of a tester who must accept or reject the forecasts of a potential expert. If experts can be skeptical...

We analyze a model of participation in elections in which voting is costly and no vote is pivotal. Ethical agents are motivated to participate when they determine that agents of their type are obligated to do so. Unlike previous duty-based models of participation, in our model an ethical...

It is well known that when agents are fully rational, compulsory public insurance may make all agents better off in the Rothschild and Stiglitz (1976) model of insurance markets. We find that when sufficiently many agents underestimate their personal risks, compulsory insurance makes low-risk...