We experimentally investigate a new variant of the trust/investment game that captures some key features of internet peer-to-peer (P2P) lending: the borrower specifies the amount of money required and makes a contingent promise about the value of the generally higher repayment prior to the...

The paper involves the analysis of the seeds of the recent debt crisis that occurred in the Eurozone area. For the analysis we use the model of Fleming and Stein (2004). This model has two risk drivers arising from uncertainties in the return on capital and the effective rate of return on net...

In this paper we use a long memory framework to examine the validity of the Purchasing Power Parity (PPP) hypothesis using both monthly and quarterly data for a panel of 47 countries over a fifty year period (1957 to 2009). The analysis focusses on the long memory parameter d that allows us to...

The theoretical literature on asymmetric first-price auctions has focused mainly on settings with either (1) exactly two bidders or (2) an arbitrary number of bidders with types in a common support. Even though closed form solutions are typically impossible, there is enough structure in the...

In this paper, we solve two problems related to growth and survival probability maximization of an economy. We assume that the problems are subject to the stochastic net worth model introduced by Fleming and Stein (2004) and apply the techniques of stochastic optimal control theory in order to...

Will generous return policies in auctions benefit bidders? We investigate this issue using second-price common-value auctions. Theoretically, we find that the bidding equilibrium is unique unless returns are free, in which case there exist multiple equilibria with different implications for...

Efforts to eradicate malaria during the 20th century succeeded in some parts of the world but failed in others. Malaria also disappeared spontaneously in several countries for reasons that remain an enigma. The connection between malaria and poverty has long been noted. Here we focus on a...

The debate over whether urbanization and related socioeconomic developments affect large-scale surface climate trends is stalemated with incommensurable arguments. Each side can appeal to supporting statistical evidence based on data sets that do not overlap, yielding inferences that merely...

The Weitzman Dismal Theorem (DT) suggests agents today should be willing to pay an unbounded amount to insure against fat-tailed risks of catastrophes such as climate change. The DT has been criticized for its assumption that marginal utility (MU) goes to negative infinite faster than the rate...

The forecast combination puzzle refers to the finding that a simple average forecast combination outperforms more sophisticated weighting schemes and/or the best individual model. The paper derives optimal (worst) forecast combinations based on stochastic dominance (SD) analysis with...