We study the distributional consequences of trade in a world with two industries and two heterogeneous factors of production. Productivity in each production unit reflects the ability of the manager and the abilities of the workers, with complementarity between the two. We begin by examining the forces that govern the sorting of worker and manager…

Supreme Court doctrine grants special protection against laws that “chill” protected speech, most prominently via the overbreadth doctrine. The overbreadth doctrine permits persons whose own speech is unprotected to challenge laws that infringe the protected speech of third parties. The Court has not generally applied overbreadth and the other…

In this paper, we consider the possibility of identifying peaceful mechanisms such as bargaining protocols, international institutions, or norms that can enable countries to settle disputes in the absence of binding contracts. In particular, we are interested in the existence of mechanisms with zero probability of war. Here, we focus on situations…

In arising rational-expectations the economic from simple models extrapolation revolution of old, in agents or macroeconomics, error-correction had backward-looking and rules. in microeconomics Then expectations, came the arising from simple extrapolation or error-correction rules. Then came the rational-expectations revolution in macroeconomics,…

Bayes' rule has two well-known limitations: 1) it does not model the reaction to zero-probability events; 2) a sizable empirical evidence documents systematic violations of it. We characterize axiomatically an alternative updating rule, the Hypothesis Testing model. According to it, the agent follows Bayes' rule if she receives information to…

Models of veto bargaining have become an important tool for formal institutional analysis. This chapter reviews the core model of veto bargaining and some of its more interesting and useful extensions, focusing on one of the best developed applications, the presidential veto over legislation. One of the primary attractions of these models is that…

After decades of convergence, the gender gap in employment outcomes has recently plateaued in many rich countries, despite the fact that women have increased their investment in human capital over this period. We propose a hypothesis to reconcile these two trends: that when they are making key human capital decisions, women in modern cohorts…

We argue that a model of judicial behavior that accounts for differences in justices' ability and ideology provides a fruitful alternative for the empirical analysis of judicial decision-making around the world, and illustrate this by focusing on the case of the United Kingdom. We show that the model explains the decisions of the Lords of Appeal…

The classical Ellsberg experiment presents individuals with a choice problem in which the probability of winning a prize is unknown (uncertain). In this paper, we study how individuals make choices between gambles in which the uncertainty is in different dimensions: the winning probability, the amount of the prize, the payment date, and the…

Working with the definition of mutual optimism as war due to inconsistent beliefs, we formalize the mutual optimism argument to test the theory's logical validity. We find that in the class of strategic situations where mutual optimism is a necessary condition for war--i.e., where war is known to be inefficient, war only occurs if both sides…