This paper reports experimental evidence on behaviour in an Ultimatum Game where responders have low structural information and feedback so that they have to learn the nature of the game during repeated play. The results lend support to the view that certain learning conditions are less...

We study extinction in a commons problem in which agents have access to capital markets. When the commons grows more quickly than the interest rate, multiple equilibria are found for intermediate commons endowments. In one of these, extinction is hastened and welfare decreases in the endowment,...

Consider an auction in which $k$ identical objects are sold to $nk$ bidders who each have a value for one object which can have both private and common components to it. Private information concerning the common component of the object is not exogenously given, but rather endogenous and bidders...

The belief that equality of demand and supply determines price and clears the market is universal. Shockingly, this belief is unfounded. It contradicts macro’s claim that equality of demand and supply determines output. It contradicts (new) monetary theory, which claims that equality of demand...

'Gainful trade: a new economics' explains why and how economics may be rebuilt from scratch to allow the occurence of gainful trade. It uses a new concept of consistency of social choice and a new analytical tool called consistency analysis to build a unified model of economics. It answers all...

Successful descriptions of the short-term nominal interest rate inertial behavior have frequently been obtained with small scale macro models in which a Central Banker minimizes a loss function containing an argument labelled as interest rate smoothing. The rationale for this argument is not...

This paper considers a sticky price model with a cash-in-advance constraint where agents forecast inflation rates with the help of econometric models. Agents use least squares learning to estimate two competing models of which one is consistent with rational expectations once learning is...

Exchange-rate-based stabilisations, even if successful, usually lack credibility initially. This is reflected in high (ex post) real interest rates and some degree of real exchange rate appreciation. Empirical observation suggests that wage inflation declines smoothly over time whilst interest...

This paper formulates dynamic R\&D investment decisions of private firms as an optimal stochastic control problem. It derives explicitly R\&D investment decision rule and the cross equations parameter restrictions imposed by the rational expectations hypothesis, using the Riccati equations only...