When costs change, firms often report waiting to update prices until inventory acquired at old prices is exhausted. This behavior is at odds with standard models, which treat historical purchase costs as sunk and predict that desired prices should follow current replacement costs. We document similar patterns in other contexts: firms' prices incorporate hedging gains/losses, and firms report passing through changes in fixed costs at similar rates as variable costs. We rationalize these behaviors with a principal–agent model where replacement costs are unverifiable but accounting costs based on realized cash flows are observable and contractible. The model integrates several puzzles about pricing: prices incorporate historical input costs and fixed costs, but respond weakly to demand shocks, replacement costs, and anticipated future costs. Accounting cost pricing means that cost fluctuations take time to propagate along supply chains, as firms work through materials and inventories purchased at pre-shock prices. Price dynamics resemble canonical sticky-price models, but anticipation of cost increases can further delay—rather than accelerate—pass-through due to forward buying. In a quantitative input–output model, accounting cost pricing can generate substantial lags in the effect of shocks on consumer prices.

This paper develops a model of news discernment to explore the influence of elections on the formation of partisan-driven parallel information universes. Using survey data from news quizzes administered during and outside the 2020 U.S. presidential election, the model shows that partisan congruence’s impact on news discernment is substantially amplified during election periods. Outside an election, when faced with a true and a fake news story and asked to select the most likely true story, an individual is 4% more likely to choose the true story if it favors their party; in the days prior to the election, this increases to 11%.