Forming expectations about the future path of the economy and the own business prospects is not costless for a fi rm. Instead, acquiring and processing the relevant macroeconomic information requires valuable resources. One important source of information that provides a coding service is the...

This paper investigates whether information complementarities can explain the strong patterns of sectoral comovement observed empirically. It tests the theoretical model by Veldkamp and Wolfers (2007), which suggests that fi rms' output decisions are based on aggregate information rather than...

In previous models of (cumulative) prospect theory reference-dependence of preferences is imposed beforehand and the location of the reference point is exogenously determined. This paper provides an axiomatization of a new specification of cumulative prospect theory, termed endogenous prospect...