We study the macroeconomic effects of systemic bank runs in a neoclassical model with a microfounded banking system. In every period, the banks provide insurance against some idiosyncratic liquidity shocks, but the possibility of sunspot-driven bank runs distorts the equilibrium allocation. In a...

In the framework of consumer theory ala Lancaster, in which preferences are defined over bundles of characteristics embodied in goods rather than over goods themselves, a concept of "irrelevant" product differentiation is introduced and its relevance at equilibrium is analyzed. It is also argued...

We develop in this paper simple geometrical methods to study local indeterminacy, bifurcations and stochastic (sunspot) equilibria near a steady state, in nonlinear two dimensional economic models. We present stochastic sunspot equilibria, which allows a constructive description of local...

It is well known from the literature that the introduction of financial constraints in economies with infinite-lived agents can be responsible for the occurrence of multiple equilibria and en- dogenous fluctuations. However, the question of the persistence of such phenomena when the constraints...

The paper deals with a cooperative game theory analysis of the economics of international agreements on climate change.

This paper provides a characterization of the consequences of the assumption that a decision maker with a given utility function is Choquet rational: She maximizes expected utility, but possibly with respect to non-additive beliefs, so that her preferences are represented by Choquet expected...

Theoretical models of government formation in political science usually assume that the head of state in non-strategic. In this paper, we analyze the power of an agenda setter who chooses the order in which players are recognized to form coalitions in simple games.

In this note we discuss two examples of approval voting games.