Discrete time dynamic programming to solve dynamic portfolio choice models has three immanent issues: Firstly, the curse of dimensionality prohibits more than a handful of continuous states. Secondly, in higher dimensions, even regular sparse grid discretizations need too many grid points for...

We consider a model of wage formation characterized by two features: learning and downward rigidity. We show that wages should exhibit a late-beginner property: when one controls for the wage at date t, the wage at date t + 1 should be negatively correlated with the wage at date t - 1. We test...

We consider a simple model of competition under moral hazard with constant return technologies. We consider preferences that are not separable in effort: marginal utility of income is assumed to increase with leisure, especially for high income levels. We show that, in this context, Bertrand...