Tests on simulated data from an asset pricing model with heterogeneous forecasts show excess variance in the price and ARCH effects in the returns, features not explained by the strong version of the efficient markets hypothesis. An evolutionary game theory dynamic describes how agents switch...

We build a workable game of common-property resource extraction under rational Bayesian learning about the renewal prospects of a resource. We uncover the impact of exogenously shifting the prior beliefs of each player on the response functions of others. What we find about the role of...

Excessive optimism is a prominent explanation for bargaining delays. Recent results demonstrate that optimism plays a subtle role in bargaining, and its careful analysis may shed valuable insights into negotiation behavior. This article reviews some of these results, focusing on the following...

We analyze a sequential bargaining model, where players are allowed to hold different beliefs about which players will make an offer and when. Excessive optimism about making offers in the future can cause a delay in agreement. Despite this, the main result states that, if players will remain...

We study strategic investment decisions in multi-stage contests with heterogeneous players. Our theoretical model of a round-robin rank-order tournament predicts that players conserve resources in a current contest to spend more in the subsequent contest if the degree of heterogeneity in the...

Given that there are significant endogenous effects in trust that cause people to follow trust norms when deciding whether to trust others, trust can be modeled as a super modular game or a game with strategic complementarities in which individuals can converge on either mutual trust or mutual...

This paper treats the risk-averse optimal portfolio problem with consumption in continuous time for a stochastic-jump-volatility, jump-diffusion (SJVJD) model of the underlying risky asset and the volatility. The new developments are the use of the SJVJD model with...

I present a peer effects model for count data using a static game of incomplete information. I provide sufficient conditions under which the game equilibrium is unique. I estimate the model's parameters using the Nested Partial Likelihood approach and establish asymptotic properties of the...

The so-called El Farol problem describes a prototypical situation of interacting agents making binary choices to participate in a non-cooperative environment or to stay by themselves and choosing an outside option. In a much cited paper Arthur (1994) argues that persistent on-converging...