Inspired by the recent literature on aggregation theory, this paper introduces HITS, a semiparametric model of consumer demand that allows for diversity in tastes. The strong variation of budget shares observed aacross income strata can arise from two economic factors: the individual income...

The Macroeconomic analysis of fiscal policy is usually based on one of two canonical models--the Barro-Ramsey model of infinitely-lived families or the Diamond-Samuelson model of overlapping generations. This paper argues that neither model is satisfactory and suggests an alternative. In the...

This paper develops a model of pricing to deter entry by a sole supplier of a network good. The authors show that the installed user base of a network good can serve a preemptive function similar to that of an investment in capacity if the entrant's good is incompatible with the incumbent's good...

In a self-confirming equilibrium, each player correctly forecasts the actions that opponents will take along the equilibrium path, but may be mistaken about the way that opponents would respond to deviations. Intuitively, this equilibrium concept models the possible steady states of a learning...

In this paper and its companion, we develop the concept of Markov strategy and Markov equilibrium for general multi-period games. Markov strategies are simple, i.e., they depend only on variables affecting current and future payoffs. By excluding the influence of all but the "important"...