In a two period strategic model of entry deterrence (a la Dixit, 1980) where the incumbent firm moves before the entrant by installing capacity for production, in a (perfect) equilibrium excess capacity is not observed under a deterministic demand. The question is: Does this result remain valid...

In this paper we discuss the problem of identification in a model with cointegration. It is pointed out that there is an identification problem for both long-run parameters and short-run parameters. The identification of the equations and the cointegrating relations is achieved by linear...

This paper studies reputation for honesty in a repeated game with one long run player facing a sequence of short run players. The long run player announces which actions he will take in the future. The long run player has several types, for some but not all it costs payoff not to follow the...

We characterize the restrictions imposed by the minimal I(2)-to-I(1) transformation that underlies much applied work, e.g. on money demand relationships or open-economy pricing relationships. The relationship between the parameters of the original I(2) vector autoregression, including the...

: This paper develops a model of financing choice by an entrepreneur about to undertake a project. The entrepreneur is essential for the project but cash-constrained. Thus, he must sell part of the project to outside investors, while remaining in control as a manager. To finance the project he...

This paper examines the interrelations between the purchasing power parity, uncovered interest parity, the term structure of interest rates and the Fisher real interest rate parity using cointegration analysis. Dynamic adjustment and feed-back effects are estimated jointly in a full system of...

Simple exchange experiments have identified the fact that participants trade their endowment less frequently than standard demand theory predicts. List (2003) finds, however, that the most experienced dealers acting on a well functioning market are not subject to this “endowment effect”....

We ran an experiment with children to study the development of honesty with age. We asked each child to toss a fair coin in private and to record the outcome (white or black) in a paper sheet. We rewarded only those who reported white. We found a fraction of reported whites signifi…cantly...

In order to model the concept of behavioral heterogeneity, some authors have employed the following approach. By using affine transformations of the price space, a consumption sector is defined as the set of all transformed demand functions of a given "generating" demand function. This leads to...

In this paper we study the effects of opening an economy, with increasing returns in the production of non traded goods, on the existence of multiple Pareto-ranked stationary equilibria, local indeterminacy and bifurcations. We consider a standard Overlapping Generation Model of a small open...