We present a novel experimental design to study social learning in the laboratory. Subjects have to predict the value of a good in a sequential order. We elicit each subject's belief twice: first ("prior belief"), after he observes his predecessors' action; second ("posterior belief"), after he...

An economy with a finite number of agents and a finite number of states is considered. An exogenous institutional rule prescribes which moves from one state to another are feasible to each coalition. At each time, an agent is called to act with some exogenous probability, and he chooses a...

We study banks' incentive to pool assets of heterogeneous quality when investors evaluate pools by extrapolating from limited sampling. Pooling assets of heterogeneous quality induces dispersion in investors' valuations without affecting their average. Prices are determined by market clearing...