We report results of a series of experiments designed to test the stability of the best reply process. With linear demand and cost functions, the process is stable if and only if there are less than three firms in the market. However, we find no experimental evidence of such instability in a...

We report results of experiments designed to test the predictions of the best reply process. In a Cournot oligopoly with four firms, the best reply process should theoretically explode if demand and cost functions are linear. We find, however, no experimental evidence of such instability....

We study how subjects in an experiment use different forms of public information about their opponents' past behavior. In the absence of public information, subjects appear to use rather detailed statistics summarizing their private experiences. If they have additional public information, they...

In this note, we argue that the Eurozone needs an institutional exit mechanism to enhance Eurozone stability, and propose modifications to the Dobbs' NEWNEY mechanism, the only mechanism that satisfies the twin properties of eliminating incentives for intra-Eurozone capital flight and...

Consider a committee that in the past has made a promise not to confiscate the profits from a foreign investor. After the investment has taken place, there is a material benefit if the committee decides to default on the earlier promise. But there are also some small moral costs for those who...

In this note, we argue that the Eurozone needs an institutional exit mechanism to enhance Eurozone stability, and propose modifications to the Dobbs' NEWNEY mechanism, the only mechanism that satisfies the twin properties of eliminating incentives for intra-Eurozone capital flight and...

Consider a committee that in the past has made a promise not to confiscate the profits from a foreign investor. After the investment has taken place, there is a material benefit if the committee decides to default on the earlier promise. But there are also some small moral costs for those who...