This work presents a static model of optimal city size. The supply is characterized by firms under imperfect competition; families with preferences for variety form the demand side. The optimal size is sensitive to economies of agglomeration (or congestion) and to the households’ utility...

BCG are widely considered to be an ideal tool for analyzing individual depth of reasoning. Accordingly, experimental results are interpreted as arising from different levels of reasoning. In this paper we turn attention to heterogeneity in computational skills. We show that the presence of...