A central conclusion of the standard theory of consumption is that consumers' preferences can be taken as theoretical primitives. Special categories of consumption, such as "basic needs", or of goods, such as "subsistence goods" are seen as extra theoretical baggage that add few, if any,...

A number of authors have attempted to test whether the US economy is in a determinate or an indeterminate equilibrium. We argue that to answer this question, one must impose a priori restrictions on lag length that cannot be tested. We provide examples of two economic models. Model 1 displays an...

In a model of asset markets with transaction costs, we find a sufcient condition for an increase in transaction costs to increase buying prices, decrease selling prices, decrease the trading volume, and make all active investors worse off. The sufficient condition is met by all CARA utility...

This paper examines whether a casino tax is good for local welfare in a tourism economy. We find that what is important for efficiency is not the tax rate itself but the tax incidence on tourists. Casino tourism in Macao engages in price discrimination via market segmentation. We prove that,...

We develop a model that combines competitive exchange of private commodities across endogenously formed groups with public good provision and global collective decisions. There is a tension between local and global collective decisions. In particular, we show that group formation and collective...

We implement a dynamic asset pricing experiment in the spirit of Lucas (1978) with storable assets and non-storable cash. In one treatment we impose diminishing marginal returns to cash to incentivize consumption-smoothing across periods, while in a second treatment there is no induced motive...

In the presence of events that are seen as ambiguous by all agents in an economy, if preferences are representable by expected uncertain utility functions (Gul and Pesendorfer, 2014), general equilibrium does not typically exist.

Proportionate Reciprocity, Modesty, and Democracy, are the key concepts in Aristotle’s economics of exchange. The following correspondence of these concepts with modern social science may be contemplated: (a) Ideally, reciprocal justice in bilateral bargaining to minimize expenditure given...