The goal of this paper is to analyze consumer demand in markets with large price uncertainty. We develop a demand model for goods that are subject to habit formation. We show that consumption plans of forward looking individuals depend not only on preferences and current period prices, but also...

Using data from the Health and Retirement Survey, we estimate preference and expectations parameters of a structural model of the employment and medical care decisions of older men in order to evaluate the role of health insurance. The budget constraint incorporates detailed cost-sharing...