We develop a simple model of the exchange rate in which agents optimize their portfolio and use different forecasting rules. They check the profitability of these rules ex post and select the more profitable one. This model produces two kinds of equilibria, a fundamental and a bubble one. In a...

A general framework is described specifying how boundedly rational decision makers generate their choices. Starting from a "Master Module" which keeps an inventory of previously successful and unsuccessful routines several submodules can be called forth which either allow one to adjust behavior...

As a part of their industry or competition policies governments decide whether to allow for free market entry of firms or to regulate market access. We analyze a model where governments (ab)use these policy decisions for strategic reasons in an international setting. Multiple equilibria of this...

Launching and stimulating competition in telecommunications markets is an important policy goal. It contains two elements: to encourage entry and to make competition effective such that consumers benefit. The first one requires that entrants can make profits after investing in infrastructure so...

Regulators have long been aware of the social aspects of communication. In the past, regulated monopolists have provided Universal Service Obligations, typically funded via a systeme of cross-subsidies. In this paper, we first review the rationale for imposing Universal Service Obligations,...

Our friend and colleague Rüdiger Dornbusch passed away before he was able to complete his book based on the Munich Lectures in Economics that he gave in November 17, 1998, at the Center for Economic Studies of Ludwig-Maximilians-Universität. The lectures contain a fascinating overview of the...

In OECD countries watching television is by far the most time-consuming form of leisure. Surprisingly, television viewing is positively correlated with work hours across countries. A simple model based on the notion of aggregate strategic complementarities in social leisure is developed which...