Diversification is one of the major components of investment decision-making under risk or
uncertainty. However, paradoxically, as the 2007–2009 financial crisis revealed, the concept …

What shapes the optimal degree of progressivity of the tax and transfer system? On the one
hand, a progressive tax system can counteract inequality in initial conditions and substitute …

This paper develops and analyzes a dynamic stochastic model for a competitive industry
which endogenously determines processes for entry and exit and for individual firms' output …

This paper presents a model in which price setting firms decide what to pay attention to,
subject to a constraint on information flow. When idiosyncratic conditions are more variable …

Empirical difficulties encountered by representative-consumer models are resolved in an
economy with heterogeneity in the form of uninsurable, persistent, and heteroscedastic labor …

This paper develops a novel theory of marketing costs within a trade model with product
differentiation and heterogeneity in firm productivities. A firm enters a market if it is profitable …

Individual producers exhibit enormous heterogeneity in many dimensions. This paper
develops a theory in which the network structure of production—who buys inputs from whom …

In this article I provide a (selective) review of the recent econometric literature on networks. I
start with a discussion of developments in the econometrics of group interactions. I …

We consider an environment in which agents' skills are private information and follow
arbitrary stochastic processes. We prove that it is typically Pareto optimal for an individual's …

We develop a model with partial insurance against idiosyncratic wage shocks to quantify risk
sharing. Closed-form solutions are obtained for equilibrium allocations and for moments of …