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Publications

2007
Gabaix X, Krishnamurthy A, Vigneron O. Limits of Arbitrage: Theory and Evidence from the Mortgage-Backed Securities Market. Journal of Finance. 2007;62 (2) :557-595.Abstract

A "limits of arbitrage" model explains patterns of risk premia in MBS.

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2006
Gabaix X, Laibson D, Moloche G, Weinberg S. Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model. American Economic Review. 2006;96 (4) :1043-1068.Abstract

An experimental investigation of the following "directed cognition" boundedly rational algorithm:  "At each decision point, agents act as if their next set of search operations were their last opportunity for search."

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Gabaix X, Laibson D. Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets. Quarterly Journal of Economics. 2006;121 (2) :505-540.Abstract

If enough consumers are boundedly rational, firms will "shroud" some information about easy to forget dimensions (e.g., the cost of the ink cartridge) even in a competitive equilibrium.

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Gabaix X, Gopikrishnan P, Plerou V, Stanley HE. Institutional Investors and Stock Market Volatility. Quarterly Journal of Economics. 2006;121 (2) :461-504.Abstract

The trades of large institutional investors in illiquid markets explain many patterns in the extreme behavior of returns and trading volume.

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2005
Gabaix X, Laibson D. Bounded Rationality and Directed Cognition [Working Paper]. 2005.Abstract

We propose a simple boundedly rational model.

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2004
Gabaix X, Ioannides Y. The Evolution of City Size Distributions. In: Handbook of Regional and Urban Economics. Vol. 4; Chapter 53. North-Holland ; 2004. pp. 2341-2378. PDF
2003
Gabaix X, Gopikrishnan P, Plerou V, Stanley HE. A Theory of Power Law Distributions in Financial Market Fluctuations. Nature. 2003;423 :267-270. Publisher's VersionAbstract

A theory in which the trades of large funds explain the power law fluctuations of returns, volumes, number of trades, and the link between them.

2002
Gabaix X, Laibson D. The 6D Bias and the Equity Premium Puzzle. NBER Macroeconomiics Annual. 2002;16 :257-312.Abstract

A model of limited attention, in which investors update their information every D period.

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1999
Gabaix X. Zipf's Law for Cities: An Explanation. Quarterly Journal of Economics. 1999;114 (3) :739-767. PDF

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