A model of endogenous price adjustment under money growth is presented. Firms follow (s,S) pricing policies, and price revisions are imperfectly synchronized. In the aggregate, price stickiness disappears, and money is neutral. The connection between firm price adjustment and relative price variability in the presence of monetary growth is also investigated. The results contrast with those obtained in models with exogenous fixed timing of price adjustment.

This paper studies the sequential equilibria of signaling games. It introduces a new solution concept, divine equilibrium, that refines the set of sequential equilibria by requiring that off-the-equilibrium-path beliefs satisfy an additional restriction. This restriction rules out implausible sequential equilibria in many examples. We show that divine equilibria exist by demonstrating that a sequential equilibrium that fails to be divine cannot be in a stable component. However, the stable component of signaling games is typically smaller than the set of divine equilibria. We demonstrate this fact through examples. We also present a characterization of the stable equilibria in generic signaling games.

An important stylized fact about labor markets is that workers with longer seniority with their current employer have higher earnings than other workers with the same total labor market experience. This study shows that the measured positive cross-sectional return to seniority is largely a statistical artifact due to the correlation of seniority with an omitted variable representing the quality of the worker, job, or worker-employer match. The implication is that earnings do not, in fact, rise very much with seniority.

The practical problems associated with accurately measuring the value of a public good in an applied setting are considered. We compare and contrast the values obtained from hypothetical elicitation procedures with those obtained in a marketplace. When hypothetical measurements are elicited in the field, buying-selling discrepancies similar to those predicted by psychological models of behavior are observed. These discrepancies decrease greatly when a market with appropriate incentives for accurate relevation is used to elicit the value for the public good.