Rational criminals choose crime over lawfulness because it pays better; hence poverty correlates to criminal behavior. This correlation is an insufficient historical explanation. An agent-based model of urban crime, mortality, and exogenous population shocks supplements the standard economic...

In this paper we study a stochastic learning model for 2, 2 normal form games that are played repeatedly. The main emphasis is put on the emergence of cycles. We assume that the players have neither information about the payoff matrix of their opponent nor about their own. At every round each...

An analytical study of the evolution of the distribution of firm size in an industry is presented. A drift-diffusion model is proposed to express the time-evolution of density of firm size within the industry. The model blends the conventional, more or less static, determinants with the kinds of...

We report results of an experiment testing for present-value maximization in intertemporal income choice. Two-thirds of subjects did not maximize present value. Through a series of experimental manipulations that impose costs on non-present value maximizers, we are able to reduce the level of...

This paper presents a dynamic model in which agents adjust their decisions in the direction of higher payoffs, subject to random error. This process produces a probability distribution of players' decisions whose evolution over time is determined by the Fokker-Planck equation. The dynamic...

Programs that work very well in optimizing convex functions very often perform poorly when the problem has multiple local minima or maxima. They are often caught or trapped in the local minima/maxima. Several methods have been developed to escape from being caught in such local optima. The...

Sell-side analysts are compensated, at least in part, by brokerage commissions. These commissions create an incentive to bias forecasts to generate trade. Thus, analysts have clear economic incentives to deceive and traders have economic incentives to detect deception. Prior analytical theories...

The evidence from many experiments suggests that people are heterogeneous with regard to their abilities to make rational, forward looking, decisions. This raises the question when the rational types are decisive for aggregate outcomes and when the boundedly rational types shape aggregate...

There is an extensive literature claiming that it is often difficult to make use of arbitrage opportunities in nancial markets. This paper provides a new reason why existing arbitrage opportunities might not be seized. We consider a world with short-lived securities, no short-selling constraints...