Science evolves in the long run. Law rules in the present. This potential temporal disconnect leads to a Hayekian “knowledge problem”, a challenge increasingly raised against behavioral law and economics: Empirical findings are deemed too uncertain to provide a solid basis for legal...

Although uncertainty plays an important role in economic decisionmaking, empirical measures of individuals' uncertainty are rare. The literature on cognition and communication documents that people use round numbers to convey uncertainty. This paper introduces a method of quantifying the...

This paper surveys some economic principles required to understand the characteristics and effects of flash orders and trading. We present the benefits and current controversies surrounding flash orders. Finally, we offer recommendations that would be of interest to policymakers

We analyze whether the timing of public information releases affects risk-sharing and pricing in a pure exchange economy. Information releases do not matter if agents have time additive preferences, homogeneous beliefs and access to complete markets. In the case of heterogeneity in agents'...

The ability of markets to aggregate information through prices is examined in a dynamic environment with unawareness. We find that if all traders are able to minimally update their awareness when they observe a price that is counterfactual to their private information, they will eventually reach...

Information frictions play an important role in many theories of expectation formation. We use a survey experiment to generate direct evidence on how people select, acquire and process information. Participants can buy different information signals that could help them forecast future national...

An event study is used to assess the views of Keynes and Friedman on speculation. Speculative extremes are ranked by intensity of sentiment and weight of speculative activity. A unique dataset of risk-reversal skew on option prices is used to measure the intensity of speculative sentiment; the...

We study the impact of diverse beliefs on conduct of monetary policy. We use a New Keynesian Model solved with a quadratic approximation. Aggregation renders the belief distribution an aggregate state variable. Diverse expectations change standard results about a smooth trade-off between...

The term Big Data is being used widely by companies and researchers who consider your relevant functionalities or applications to create value and business innovation. However some questions arise about what is this phenomenon and, more precisely, how it occurs and under what conditions it can...

This research hypothesizes that in markets where information costs, transactions costs and the economic impact of information can vary widely, we should expect both significant predictability and systematic variation in the predictability. Controlling for other factors, we find that on average,...