We propose a new approach to test the full-information rational expectations hypothesis
which can identify whether rejections of the null arise from information rigidities. This …

We measure the pass-through of emissions costs to electricity prices. We perform both
reduced-form and structural estimations based on optimal bidding in this market. Using rich …

The causal effects of central bank communication on economic expectations and their
underlying mechanisms are tested in controlled laboratory experiments. We find that central …

Economics Nobel Laureate Herbert Simon developed the concept of bounded rationality in
the 1950s. This asserts that the cognitive abilities of human decision-makers are not always …

We model risk management as information acquisition that delays trading decisions. In
markets with preemptive competition, this can lead to a race to the bottom, where prioritizing …

During financial crises, financial market regulators often restrict short-selling to support
prices and curb volatility. However, evidence suggests that short-selling bans during the …

A decision maker faces a choice to withdraw or to retain a product but is uncertain about its
safety. An agent can gather information through sequential testing. Players agree on the …

I characterize the preferences over sets of acts that result from the Rational Inattention Model
of Sims [2003]. Each act specifies a consequence depending on the state of the world. The …

A vast literature has documented how US inflation persistence has fallen in recent decades,
but this finding is difficult to explain in monetary models. Using survey data on inflation …

This article examines the asymmetric/discriminative effects of investor attention on expected
stock returns among 15 markets through economic expansions and recessions. The …