We define continuous-time dynamics for exchange economies with fiat money. Traders have locally rational expectations, face a cash-in-advance constraint, and continuously adjust their short-run dominant strategy in a monetary strategic market game involving a double-auction with limit-price...

The theory of transformation pressure sheds light on the importance of negative driving forces for economic growth and the countercyclical movement in innovations and productivity growth. The theory suggests that firms have a status-quo bias in periods of increasing profits leading to lower...

Hayek maintains that models of complexity must consider two closely interrelated factors: the large number of variables and the connections among them. These two conditions, which define complex phenomena, exhibit a different logical dimension. The former (the 'large number of variables')...

Field data are used to illustrate that, other things constant, regression results using Ordinary Least Squares (OLS) converge to Tobit estimates as the number of zeros in the regressand decrease. Tobit estimates are theoretically superior to OLS estimates when using censored data. However, if...

After briefly reviewing recent economic theories about the economic welfare consequences of public provision of private commodities, this article examines the cost efficient supply of publicly provided commodities. In the light of the presence of transaction costs and bounded rationality, and...

Relationships between bounded rationality and transaction cost theories are discussed and their connections with stochastic theories of industrial evolution are considered. While these theories have their limitations, they are useful but have been ignored in many public policy prescriptions,...

After briefly reviewing recent economic theories about the economic welfare consequences of public provision of private commodities, this article examines the cost efficient supply of publicly provided commodities. In the light of the presence of transaction costs and bounded rationality, and...

This Paper presents a model in which boundedly rational members of an administrative staff calculate resource allocations in real time. We consider a class of hierarchical procedures in which information about payoff functions flows up and is aggregated by a hierarchy, while allocations flow...

I study how savers allocate funds between boundedly rational firms which follow simple pricing rules. Firms need cash to pay their inputs in advance, and savers-shareholders allocate cash between them so as to maximize their rate of return. When the rate of return on each firm is observed, there...

We examine how a firm's changing environment and the information constraints of its managers interact as determinants of the size of the firm's administration. Following the recent decentralised information processing literature, we assume that it takes individual managers time to process...