In a model calibrated to match micro- and macroeconomic evidence on household income dynamics, we show that a modest degree of heterogeneity in household preferences or beliefs is sufficient to […]
Research Highlight Category: Economic theory
Hybrid Decision Model and the Ranking of Experiments
Departing from the reduction of compound lotteries axiom on multi-stage lotteries, this paper proposes a new hybrid model to analyze decision trees. Applied to multi-stage decision trees induced by experiments, […]
Comparative Incompleteness: Measurement, Behavioral Manifestations and Elicitation
This paper introduces measures of overall incompleteness of preference relations under risk and uncertainty, as well as measures of incompleteness of beliefs and tastes. These measures are used to define […]
Due Diligence
We propose a model of due diligence and analyze its effect on prices, payoffs, and deal completion. In our model, if the seller accepts an offer, the winning bidder (or […]