Literature concerning the transactions theory of demand for money often contains the assumption that simple trigger-target rules are optimal when each financial transaction is accompanied by a fixed cost. The validity of this assumption is examined in this paper. Using a simple example, it is...

This paper presents an extension of the life cycle permanent-income model of consumption to the case of a durable good whose purchase involves limpy transactions costs. By integrating the advancement/postponement decision in the individual's analysis, the implications of the model are different...

We use traffic data from a series of experiments in the United States and Israel to examine how illegal behavior is deterred by various penalty schemes and whether deterrence varies with age, income, driving record and criminal record. We find that red light running decreases sharply in response...

This paper presents an extension of the life-cycle permanent-income model of consumption to the case of a durable good whose purchase involves lumpy trans- actions costs. Where individual behavior is concerned, the implications of the model are different in some respects from those of standard...

The authors argue that lumpy, nonconvex transaction costs are the norm for a wide range of economic decisions, which are thus characterized by inertial behavior. Application of this idea to the consumption of durable goods yields an (S,s) decision rule, which, when aggregated, highlights the...

This paper presents a model of trade-off between employee moral hazard and adverse selection. When productivity is unobservable and heterogeneous, a firm can use the information extracted from shirking (moral hazard) to alleviate the problem of adverse selection and improve its pool of workers....

In its certainty equivalence form, consumption is proportional to the sum of human and non-human wealth. With labour income uncertainty the proportionality takes the form of homogeneity of consumption with respect to the components of wealth. In this paper we analyse the stochastic properties of...

This paper presents a stochastic analysis of the demand for interest-bearing money, such as NOW accounts, when overdrafting is allowed at some penalty rate. It is shown that the short-run interest elasticity of money demand is probably large (in absolute value) and negative, but in the long run...

We use traffic data from a series of experiments in Israel and San Francisco to examine how illegal behavior is deterred by higher fines and whether deterrence varies with personal characteristics such as criminal record, driving record, income, and age. We find that red-light running decreases...