Toward a theory of consumerism

Consumerism is not unique to modern times or to the United States. Eight hypotheses explaining the movement arc based on history, sociology, law, economics, and psychology.     

Sequential bargaining in a market with one seller and two different buyers

A matching and bargaining model in a market with one seller and two buyers, differing only in their reservation price, is analyzed. No subgame perfect equilibrium exists for stationary strategies. We demonstrate the existence of inefficient equilibria in which the low buyer receives the good with large probability, even as friction becomes negligible. We investigate the relationship between the use of Nash and sequential bargaining. Nash bargaining seems applicable only when the sequential approach yields a unique stationary strategy subgame perfect equilibrium.     

On the Efficiency of Decentralized Exchange with Resale Possibilities

This paper studies decentralized exchange by bilateral matching and bargaining when resale is possible. Decentralized exchange involves the risk that goods and services may be allocated inefficiently; if low-valuation buyers consume while high-valuation buyers do not, then social welfare is reduced. If resale is possible and transaction costs are negligible, we would nevertheless expect an efficient allocation to result from decentralized exchange. This paper suggests that this depends on the nature of the commodity; while the allocation of a durable good will be efficient, the allocation of a "consumable" good need not.     

Correlation at First Sight

The synthetic collateralized debt obligation (CDO) market has, over the last year, seen a significant increase in liquidity and transparency. The availability of published prices such as TracX and iBoxx tranches permits the calibration of model parameters, which was not achievable a year ago. This paper details what we believe has become the market standard approach in CDO valuation. The valuation model is introduced and analysed in depth to develop a better practical understanding of its use and the implications of parameter selection and calibration. In particular, we examine the idea that correlation within a copula model can be seen to be an equivalent measure to volatility in a standard B&S option framework and, correspondingly, we seek to calibrate smile and skew.     

Dynamic research environments: a development model

The paper outlines a model for the development of dynamic and innovative research environments in national innovation systems. The development model is based on an in-depth study and analysis of fifteen research environments selected by the Danish Council for Research Policy as examples of dynamic and innovative public research environments. According to the model, research environments follow certain stages with respect to epistemological, organizational and socio-cultural development that either enable them to advance from one stage to the next in the model or impede this advance. The consequence of the latter is either a static state or dissolution. In the long run only dynamic and innovative research environments survive. The analysis of the cases studied identifies several preconditions that have to be present in such research environments in order for them to emerge, develop and finally reach excellence. The results presented here may well be a valid tool for policy-makers, particularly in Europe where the framework conditions for public R&D are comparable to the Danish.     

Adaptive learning in extensive form games and sequential equilibrium

Summary. This paper studies adaptive learning in extensive form games and provides conditions for convergence points of adaptive learning to be sequential equilibria. Precisely, we present a set of conditions on learning sequences such that an assessment is a sequential equilibrium if and only if there is a learning sequence fulfilling the conditions, which leads to the assessment. Received: November 5, 1996; revised version: May 28, 1997     

The Wilderness as a Source of Recreation and Renewal:

A bstract . Data from a National Endowment for the Arts survey done by the U.S. Bureau of the Census in 1982 and 1985 (n = 2,678) reveal the modern wilderness lover is better educated, more affluent, and more heavily engaged in leisure activities than the less frequent visitor to the wilderness. Today's frequent wilderness user is also more likely to participate in out-of-home activities including movies, sports events, museums, and amusement parks, than is the generally less active infrequent visitor. Frequent users are almost exclusively white; with nearly equal participation rates for men and women ; they reside in the suburbs and work as professionals. They are better educated and pursue more intellectual leisure-time interests such as reading, reading poetry, and attending cultural events. Less educated infrequent users were poorer, participated in less challenging pursuits, and were predominantly male. However, the two groups exhibited only minor differences in their preference orderings , suggesting that the groups may move towards similarity if their opportunities change.     

Fictitious Play in Extensive Form Games

This article analyzes the fictitious play process originally proposed for strategic form games by Brown (1951) and Robinson (1951). We interpret the process as a model of preplay thinking performed by players before acting in a one-shot game. This model is one of bounded rationality. We discuss how fictitious play should then be defined for extensive form games and conclude that this is somewhat problematic. We therefore study two alternative definitions. For either of these, under a weak condition of initial uncertainty, a convergence point of a fictitious play sequence is a sequential equilibrium. For generic games of perfect information initial uncertainty also implies convergence of fictitious play.Journal of Economic LiteratureClassification Number: C72.