What You Can't See: Contingent Thinking Failures in Dynamic Markets

• Abstract
  People make correct inferences from observed events but make mistakes when reasoning about hypothetical events. I study the implications in competitive markets. I define Dynamic Cursed Expectations (DCE), where agents treat events occurring at different future periods as independent. I build on it to define Dynamic Cursed Expectations Equilibrium (DCEE) and prove its existence for financial economies in which traders have CARA preferences, access to riskless storage, and signals that inform only about the next period's dividends. I apply DCEE to an asset pricing model and show that in DCEE agents underestimate the variance of risky assets, which under risk aversion leads to overvaluation relative to the Rational Expectations Equilibrium benchmark.

Sequential Cursed Equilibrium (with Shengwu Li)
American Economic Review, March 2026

• Abstract
  We propose an extensive-form solution concept, with players that neglect information from hypothetical events, but make inferences from observed events. Our concept modifies cursed equilibrium (Eyster and Rabin, 2005), and allows that players can be 'cursed about' endogenous information.

Generalizing Random Real Forcing for Inaccessible Cardinals (with Saharon Shelah)
Israel Journal of Mathematics, September 2019

• Abstract
  The two parallel concepts of "small" sets of the real line are meagre sets and null sets. Those are equivalent to Cohen forcing and Random real forcing for ℵ0^ℵ0; in spite of this similarity, the Cohen forcing and Random Real forcing have very different shapes. One of these differences is in the fact that the Cohen forcing has an easy natural generalization for λ^λ while λ>ℵ0, corresponding to an extension for the meagre sets, while the Random real forcing didn't see to have a natural generalization, as Lebesgue measure doesn't have a generalization for space λ^λ while λ>ℵ0. Shelah found a forcing resembling the properties of Random Real Forcing for λ^λ while λ is a weakly compact cardinal. Here we describe, with additional assumptions, such a forcing for λ^λ while λ is an inaccessible cardinal; this forcing preserves cardinals and cofinalities, however unlike Cohen forcing, does not add undominated reals.