In many security markets, dealers trade with their regular clients at a discount relative to prevailing bid and ask quotes. In this article we provide an explanation to this phenomenon. We consider a dealer and an investor engaged in a long-term relationship. The dealer assigns a reputational...

In a simple OLG model, we analyze expectations coordination on a Stationary Sunspot Equilibrium (SSE), using an ??eductive?? approach in which agents forecast the forecasting of other participants through Common Knowledge assumptions. We characterize the local stability of a SSE in terms of...

In this paper we study expectations coordination on a deterministic 2-cycle by an "eductive" approach in which agents are concerned with forecasting the forecasts of others. This approach is grounded in some Common Knowledge assumption. We show that eductively stable 2-cycles exit. We also show...

In this paper we study expectations coordination on the stationary state in a one dimensional economy. We allow for two sources of heterogeneity : the first concerns the fundamentals of the economy, the second the adaptive learning rules. Specifically we consider heterogeneous adaptive learning...