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Feedback and Contagion through Distressed Competition

Chen, Hui; Dou, Winston Wei; Guo, Hongye; Ji, Yan - National Bureau of Economic Research - 2023

Firms tend to compete more aggressively in financial distress; the intensified competition in turn reduces profit margins, pushing themselves further into distress and adversely affecting other firms. To study such feedback and contagion effects, we incorporate strategic competition into a...

Persistent link: https://www.econbiz.de/10013537735

Discretionary Policy and Multiple Equilibria

King, Robert G. - 2006

Discretionary policymaking can foster strategic complementarities between private sector decisions, thus leading to multiple equilibria. This article studies a simple example, originating with Kydland and Prescott, of a government which must decide whether to build a dam to prevent adverse...

Persistent link: https://www.econbiz.de/10012466593

The Political Economy of Responses to COVID-19 in the U.S.A.

Cui, Zhihan; Heal, Geoffrey; Kunreuther, Howard; Liu, Lu - National Bureau of Economic Research - 2021

Social distancing via shelter-in-place strategies, and wearing masks, have emerged as the most effective non-pharmaceutical ways of combatting COVID-19. In the United States, choices about these policies are made by individual states. We develop a game-theoretic model and then test it...

Persistent link: https://www.econbiz.de/10012496132

You Only Die Once : Managing Discrete Interdependent Risks

Heal, Geoffrey - 2003

This paper extends our earlier analysis of interdependent security issues to a general class of problems involving discrete interdependent risks with heterogeneous agents. There is a threat of an event that can only happen once, and the risk depends on actions taken by others. Any agent's...

Persistent link: https://www.econbiz.de/10012468812

Business, Liquidity, and Information Cycles

Bostanci, Gorkem; Ordoñez, Guillermo - National Bureau of Economic Research - 2024

liquidity by quickly turning stocks into cash. We propose a trading model in which these two roles are endogenously related …: more intensive use of stocks for liquidity affects both the information and the noise about fundamentals contained in … banking system has trouble providing liquidity. We incorporate this module into a dynamic general equilibrium model to study …

Persistent link: https://www.econbiz.de/10014544779

The Streetlight Effect in Data-Driven Exploration

Hoelzemann, Johannes; Manso, Gustavo; Nagaraj, Abhishek; … - National Bureau of Economic Research - 2024

We examine innovative contexts like scientific research or technical R&D where agents must search across many potential projects of varying and uncertain returns. Is it better to possess incomplete but accurate data on the value of some projects, or might there be cases where it is better to...

Persistent link: https://www.econbiz.de/10014544680

Disentangling Exploration from Exploitation

Lizzeri, Alessandro; Shmaya, Eran; Yariv, Leeat - National Bureau of Economic Research - 2024

Starting from Robbins (1952), the literature on experimentation via multi-armed bandits has wed exploration and exploitation. Nonetheless, in many applications, agents' exploration and exploitation need not be intertwined: a policymaker may assess new policies different than the status quo; an...

Persistent link: https://www.econbiz.de/10014544703

Why Did Putin Invade Ukraine? A Theory of Degenerate Autocracy

Egorov, Georgij V.; Sonin, Konstantin - National Bureau of Economic Research - 2023

Many, if not most, personalistic dictatorships end up with a disastrous decision such as Hitler's attack on the Soviet Union, Hirohito's government launching a war against the United States, or Putin's invasion of Ukraine in February 2022. Even if the decision is not ultimately fatal for the...

Persistent link: https://www.econbiz.de/10014250204

Information-Constrained Coordination of Economic Behavior

Aridor, Guy; Silveira, Rava Azeredo da; Woodford, Michael - National Bureau of Economic Research - 2024

We analyze a coordination game with information-constrained players. The players' actions are based on a noisy compressed representation of the game's payoffs in a particular case, where the compressed representation is a latent state learned by a variational autoencoder (VAE). Our generalized...

Persistent link: https://www.econbiz.de/10014486205

Mistrust, Misperception, and Misunderstanding : Imperfect Information and Conflict Dynamics

Acemoglu, Daron; Wolitzky, Alexander - National Bureau of Economic Research - 2023

Building on theories of international relations, we analyze how mistrust (uncertainty about an adversary's preferences or capabilities), misperception (imperfect observation of an adversary's actions), and misunderstanding (non-degenerate higher-order beliefs) can lead to conflict and drive its...

Persistent link: https://www.econbiz.de/10014372438

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