We review the continuous--time literature on the so-- called direct approach to bond option pricing. Going back to Ball and Torous (1983), this approach models bond price processes directly (i.e. without reference to interest rates or state variable processes) and applies methods that Black and...

We analyze the asymptotic behaviour of kernel

Aspiration adaptation theory (Sauermann and Selten, 1962), not available in English up to now, is a general model of non-optimizing boundedly rational behavior. The theory is presented in a more formal fashion than in the original paper. Moreover, the presentation is complemented by remarks on...

his article presents a new type of business-cycle index that allowsM for cycle-to-cycle comparisons of the depth of recessions within a country,M cross-country comparisons of business-cycle correlation andM simple aggregation to arrive at a measure of a European business cycle.M The paper...

If payoffs are tickets for binary lotteries, which involve only two money prizes, then rationality requires expected value maximization in tickets. This payoff scheme was increasingly used to induce risk neutrality in experiments. The experiment presented here involved lottery choice and...

We study monetary policy when the labor-market insiders set the wage so that the outsiders are involuntarily unemployed. If the insiders are in the majority, the representative insider will be the median voter. Consequently, neither an independent nor a government-dependent central banker is...

We formulate a dynamic learning-and-adjustment model of a market in which sellers choose signals that potentially reveal their types. If the dynamic process selects a unique limiting outcome, then that outcome must be an undefeated equilibrium; though to be undefeated does not suffice to be the...

he present paper analyses a broad range of one- and multifactor models of the term structure of interest rates. We assess the influence of the number of factors, mean reversion, and the factor probability distributions on the term structure shapes the models generate, and use spread options as...