The Taylor rule in combination with the zero lower bound on nominal rates has been shown to create an unintended liquidity-trap equilibrium. The relevance of this equilibrium has been challenged on the basis that it is not stable under least-square learning. In this paper, we show that the...

We analyze the effects of social learning in a widely-studied monetary policy context. Social learning might be viewed as more descriptive of actual learning behavior in complex market economies. Ideas about how best to forecast the economy's state vector are initially heterogeneous. Agents can...

We report on experimental evidence rationalizing the use of heterogeneous agent models. We provide compelling evidence that subjects in laboratory experiments often behave in ways that depart from the rational choice ideal. Further, these subjects' heuristic approaches often differ from one...

We develop a framework for studying the introduction of a new payment method in a controlled laboratory environment, where consumers (buyers) and merchants (sellers) can learn to coordinate their adoption decisions over time. The underlying game exhibits network adoption effects as emphasized by...

In this paper, we extend the individual evolutionary learning model by incorporating other-regarding considerations and apply the model to some Cournot games. Using the model fitted to the experimental data of a repeated 3-player Cournot game (with nonlinear cost and demand functions), we...

The continuous double auction (CDA) is a well-studied, widely used institution for trading. But there is no generally accepted theory about the dynamics of price formation within the first period that has survived experimental testing. In this paper, we describe a model of behavior (called...

This paper studies the behavior of the exchange rate in the Kareken-Wallace overlapping generations economy with two currencies in which decision rules are updated using the genetic algorithm. The analysis shows that a stationary monetary equilibrium of the Kareken-Wallace model is not stable...

This paper studies the behavior of the exchange rate in the Kareken-Wallace overlapping generations economy with two currencies in which decision rules are updated using the genetic algorithm. The analysis shows that a stationary monetary equilibrium of the Kareken-Wallace model is not stable...

A "sunspot" is a variable that has no direct impact on the economy’s fundamental condition, such as preferences, endowments or technologies, but may nonetheless affect economic outcomes through the expectations channel as a coordination device. This paper investigates how people react to...