Using a dynamic multivariate system, where variables are aligned in order to reflect data availability at the time when agents form their expectations, we show that survey expectations contain relevant information about business cycle developments in the euro area.

We evaluate survey-based wage-growth expectations and find that they are neither unbiased nor efficient forecasts. Concerning out-of-sample forecast precision, survey participants generally perform worse than a constant forecast. Caution should accordingly be exercised when relying on these data...

This paper uses a two-step approach to characterize the evolution of US macroeconomic and financial variables during episodes of very high uncertainty. First, we identify episodes of very high uncertainty using a regime-switching model. Second, we assess the behavior of macroeconomic and...

We present an alternative measurement method of investor overconfidence, using unique survey data on stock market predictions of investors. We apply the Parkinson estimate based on extreme bounds around the stock forecast to deduce investor confidence. The results support overconfidence.

Random choices of prices and product characteristics can be used by a contestable monopolist to deter entry and fully extract the monopoly rent. We develop this idea in a model of Bertrand price competition. In equilibrium, one firm enters the market and makes choices that are unpredictable to...

According to the well-known “merger paradox”, in a Cournot market game mergers are generally unprofitable unless most firms merge. The present paper proposes an optimal merger mechanism. With this mechanism mergers are never unprofitable, more profitable than in other known mechanisms, and...

“Overbidding” with respect to risk-neutral Nash predictions in first-price auction experiments has been consistently reported in the literature. One possible explanation for overbidding is that participants in these experiments do not have a clear perception of probabilities, which causes...

Laitinen (1980) derives an input allocation model for a multiproduct firm that first maximizes revenue and second maximizes profit. While theoretically elegant, the model has never been formulated empirically because of the complexity of the model’s price-deflated terms. This paper derives the...

Using grocery store data we study the relationship between dispersion and the business cycle. Our findings reveal that overall there is no robust and significant relationship; however, these mask important heterogeneity in the cyclicality of dispersion at the category level.

We present a polynomial time method for identifying the maximal set in excess demand at a given payoff vector. This set can be used in “large” partnership formation problems to identify the minimum element in the set of individually rational payoff vectors at which there is no overdemanded...