We propose a boundedly rational model of opinion formation in which individuals are subject to persuasion bias; that is, they fail to account for possible repetition in the information they receive. We show that persuasion bias implies the phenomenon of social influence, whereby one’s...

We propose a boundedly-rational model of opinion formation where agents are subject to the phenomenon of persuasion. We argue that persuasion - whereby repeated exposure to an opinion has a cumulative effect on an agent's beliefs - is pervasive and closely related to the concept of social...

We propose a boundedly-rational model of opinion formation where agents are subject to the phenomenon of persuasion. We argue that persuasion--whereby repeated exposure to an opinion has a cumulative effect on an agent's beliefs--is pervasive and closely related to the concept of social...

The authors consider a wide number of applications of an intrafirm bargaining game within organizations where employees and the firm engage in wage negotiations. Under their presumption that contracts cannot bind employees to the organization, the resulting stable wage and profit profiles give...

This paper demonstrates that, in a simple setting with managerial concern for reputation and asymmetric information on ability, most managers may refrain from undertaking innovations that stochastically dominate an industry standard. Common components of uncertainty lead to market inferences of...

We analyze the design and renegotiation of covenants in debt contracts as a specific example of the contractual assignment of property rights under asymmetric information. Specifically, we consider a setting where managers are better informed than lenders regarding potential transfers from debt...