Abstract :
In this article, we show that a standard economic model, the endogenous
learning-by-doing model, captures several major themes from the anxiety literature
in psychology. In our model, anxiety is a fully endogenous construct that
can be separated naturally into its cognitive and physiological components. As
such, our results are directly comparable with hypotheses and evidence from psychology.
We show that anxiety can serve a motivating function, which suggests
potential applications in the principal–agent literature.
