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Showing results 1 to 10 of approximately 43.
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Working Paper
Stable cartels with a Cournot fringe
Report
Sustainable plans
We propose a definition of time consistent policy for infinite horizon economies with competitive private agents. Allocations and policies are defined as functions of the history of past policies. A sustainable equilibrium is a sequence of history-contingent policies and allocations that satisfy certain sequential rationality conditions for the government and for private agents. We provide a complete characterization of the sustainable equilibrium outcomes for a variant of Fischer?s (1980) model of capital taxation. We also relate our work to recent developments in the theory of repeated ...
Working Paper
Protection and retaliation: changing the rules of the game
An examination of the macroeconomic, political, and institutional environment of the 1930s and the 1980s suggests a set of stylized facts associated with periods of trade tension and incidents of trade retaliation. Periods of macroeconomic stress precipitate changes in the conduct of and implementation of U.S. trade policy, which then can lead to escalating trade tension, protectionist measures, and perhaps retaliation. Macroeconomic stress, especially when linked to external events, decreases the political benefits of following a liberal trade policy and changes the economic consequences of ...
Report
Settlement delays in the money market
We track 38,000 money market trades from execution to delivery and return to provide a first empirical analysis of settlement delays in financial markets. In line with predictions from recent models showing that financial claims are settled strategically, we document a tendency by lenders to delay delivery of loaned funds until the afternoon hours. We find that banks follow a simple strategy to manage the risk of account overdrafts - delaying the settlement of large payments relative to that of small payments. More sophisticated strategies, such as increasing settlement delays when own liquid ...
Report
Eliciting traders' knowledge in \\"frictionless\\" asset market
Intuitively, a patient trader should be able to make his trading partners compete to reveal whatever information is relevant to their transactions with him. This possibility is examined in the context of a model resembling that of Gale (1986). The main result is that, under assumptions having to do with asset structure and spanning, incentive-compatible elicitation of trading partners? knowledge is feasible.
Report
An experimental study of learning and limited information in games
We report on experiments that tested the predictions of competing theories of learning in games. Experimental subjects played a version of the three-person matching-pennies game. The unique mixed-strategy Nash equilibrium of this game is locally unstable under naive Bayesian learning. Sophisticated Bayesian learning predicts that expectations will converge to Nash equilibrium if players observe the entire history of play. Neither theory requires payoffs to be common knowledge. We develop maximum-likelihood tests for the independence conditions implied by the mixed-strategy Nash equilibrium. ...
Working Paper
Dynamic games with hidden actions and hidden states
We consider the large class of dynamic games in which each player?s actions are unobservable to the other players, and each player?s actions can influence a state variable that is unobservable to the other players. We develop an algorithm that solves for the subset of sequential equilibria in which equilibrium strategies are Markov in the privately observed state.
Working Paper
Strategic role complementarity
Conference Paper
Money, deficit and public debt: an empirical investigation
Report
Dynamic games with hidden actions and hidden states
We consider a class of dynamic games in which each player?s actions are unobservable to the other players and each player?s actions can influence a state variable that is unobservable to the other players. We develop an algorithm that solves for the subset of sequential equilibria in which equilibrium strategies depend on private information only through the privately observed state.