We use a spatial competition based model in a two-stage game setup to assess whether equilibrium in exchange rates among the leading currencies is attainable. We show that a stable equilibrium can be reached in the case of two leading currencies, but not in the case of three. In our model,...

In this paper we consider an overlapping generations model with endogenous fertility and two-sided altruism and show the limitations of applying commonly used open loop Nash equilibrium in characterizing equilibrium transfers from parents to children in the form of bequest, and transfers from...

This paper develops a model of pricing and advertising in a matching environment with capacity constrained sellers. Sellers' expenditure on directly informative advertising attracts consumers only probabilistically. Consumers who happen to observe advertisements randomize over the advertised...

We study the optimal design of the rules of trade in a two-period market given that agents arrive at different times and may only trade with agents present contemporaneously. First period agents face a fixed cost of trading across periods, and their decisions of whether or not to trade in the...

For groups that must make several decisions of similar form, we define a simple and general mechanism that is designed to promote social efficiency. The mechanism links the various decisions by forcing agents to budget their representations of preferences so that the frequency of preferences...

Auctions used to sell houses often attract a diverse group of bidders, with realtors and speculators out for a bargain competing against buyers with a real interest in the house. Value asymmetries such as these necessitate careful consideration of the auction format as revenue equivalence cannot...

This paper shows that altruism may be beneficial in bargaining when there is competition for bargaining partners. In a game with random proposers, the most altruistic player has the highest material payoff if players are sufficiently patient. However, this advantage is eroded as the discount...

We study a simple bargaining mechanism in which each player puts a prize to his resources before leaving the game. The only expected final equilibrium payoff can be defined by means of selective marginal contributions vectors, and it coincides with the Shapley value for convex games. Moreover,...

We report results of a series of experiments designed to test the stability of the best reply process. With linear demand and cost functions, the process is stable if and only if there are less than three firms in the market. However, we find no experimental evidence of such instability in a...

This paper considers bidding automata programmed by experienced subjects in sequential first price sealed bid auction experiments. These automata play against each other in computer tournaments. The risk neutral subgame perfect Nash equilibrium strategy of the independent private value model...