In a recent paper Bagwell (1995) pointed out that only the Cournot outcome, but not the Stackelberg outcome, can be supported by a pure Nash equilibrium when actions of the Stackelberg leader are observed with the slightest error. The Stackelberg outcome, however, remains close to the outcome of...

We provide a simple theory of inflation inertia in a staggered price setting framework a la Calvo (1983). Contrary to Calvo's formulation, the frequency of price changes is allowed to vary according to an evolutionary criterion. Inertia is the direct result of gradual adjustment in this...

We consider a homogenous good oligoply with identical consumers who learn about prices either by (sequentially) visiting firms or by consulting a price agency who sells information about which firm charges the lowest price. In the sequential equilibrium with maximal trade and minimal search,...

Consider a decision maker who must coordinate his decision with the occurrence of some phenomenon. In order to behave "optimally," the circumstances surrounding the occurrence of the phenomenon must be learned. However, there are natural bounds on the capabilities of perception. More...

We present a new method for constructing exact distribution-free tests (and confidence intervals) for variables that can generate more than two possible outcomes. This method separates the search for an exact test from the goal to create a non- randomized test. Randomization is used to extend...

Small sample properties are of fundamental interest when only limited data is avail- able. Exact inference is limited by constraints imposed by speci.c nonrandomized tests and of course also by lack of more data. These e¤ects can be separated as we propose to evaluate a test by comparing its...

We consider an agent who has to repeatedly make choices in an uncertain and changing environment, who has full information of the past, who discounts future payoffs, but who has no prior. We provide a learning algorithm that performs almost as well as the best of a given finite number of experts...

We consider a robust version of the classic problem of optimal monopoly pricing with incomplete information. In the robust version, the seller faces model uncertainty and only knows that the true demand distribution is in the neighborhood of a given model distribution. We characterize the...

We consider a robust version of the classic problem of optimal monopoly pricing with incomplete information. In the robust version of the problem the seller only knows that demand will be in a neighborhood of a given model distribution. We characterize the optimal pricing policy under two...

This Paper discovers significant differences between southern and northern Europeans in a dynamic version of the ‘trust game’ played by Ph.D. students from different nationalities at the European University Institute. Our version of the trust game allows subjects to choose the receivers to...