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We suggest a simple asset market model in which we analyze competitive and strategic behavior simultaneously. If two-fund separation is found to hold across periods for competitive behavior, it also holds for strategic behavior. In this case the relative prices of the assets do not depend on...
Persistent link: https://www.econbiz.de/10005858107
Based on an experimental analysis of a simple monetary economy we argue that a monetary system is more stable than one would expect from individual rationality. Weshow that positive reciprocity stabilizes the monetary system, provided everyparticipant considers accepting money as a reasonable...
Persistent link: https://www.econbiz.de/10005858586
This paper contributes to the micro-foundation of money in centralizedmarkets with idiosyncratic uncertainty. It shows existence of stationarymonetary equilibria and ensures that there is an optimum quantity ofmoney. The rational solution of our model is compared with actual be-havior in a...
Persistent link: https://www.econbiz.de/10005858589
We explain excess volatility, short-term momentum and long-term reversal of asset prices by a repeated game version of Keynes beauty contest. In every period the players can either place a buy or sell order on the asset market. The actual price movement is determined by average market orders and...
Persistent link: https://www.econbiz.de/10005859323