A popular theory of business cycles is that they are driven by animal spirits: shifts in expectations brought on by sunspots. Two prominent examples are Diamond (JPE, 1982) and Howitt and McAfee (AER, 1992). We show that these models have unique equilibria if there are payoff shocks of any size....

While the paper examined the effect of different tax regimes on the Israeli automobile market, the main contribution of this paper is the methodology it employs. As demonstrated, owr framework provides a methodology for examining the effects of changes in tax regimes in differential product...

The paper characterizes the following empirical relations between firms in an industry and between industries: (a) How the wage hierarchy of industries and that of firms (within each of the different industries) changes over time; (b) The relation of the average firm's wage to its size and the...

A long-standing conjecture is that winner-take-all games such as patent races lead to the survival of risk-takers and the extinction of risk-averters. In many species a winner-take-all game determines the males' right to reproduce, and the same argument suggests that males will evolve to be...

I introduce a solution concept for infinite-horizon games, called ``Experimental Equilibrium``, in which players systematically test threats that affect their optimal response. Both the tests and the optimal response are part of equilibrium behavior.

This paper propose an experimental approach to studying different aspects of discrimination. Experiment participants played various games with opponents of distinct ethnic affiliation. When strategic choices depend upon this ethnic affiliation, we gain direct evidence of ethnic discrimination.

In many decision scenarios, one has to choose an element from a set S given some reference point e. For the case where S is a subset of the Euclidean space , we axiomatize the choice method that selects the point in S that is closet to e.