Existence of Equilibria in Matching Models of Money: A New Technique

This paper develops a new technique for proving the existence and indeterminacy of monetary equilibria in money search models with divisible money. Our technique is substantially simpler than standard constructive proofs in the literature. This paper is based on the second half of Kamiya and Shimizu (2002). We are very grateful to the associate editor and an anonymous referee of this journal for their very detailed suggestions and comments. This research is financially supported by Grant-in-Aid for Scientific Research from JSPS and MEXT. The second author also acknowledges the financial support by Zengin Foundation for studies on Economics and Finance.     

Addiction,social interactions and gender differences in cigarette consumption

This paper addresses the impact of addiction and social interactions on cigarette demand, controlling for demographic and socioeconomic factors. A Box–Cox double-hurdle model for the simultaneous decisions of how much to smoke and whether to quit smoking is estimated on individual data from the 2000 Italian “Health Status and Use of Health Services” survey. The model incorporates the fixed costs of quitting and allows for the analysis of the effects of addiction and social interactions on smoking participation and cigarette consumption. Estimation results show that the duration of the smoking habit, used as measure of addiction, significantly increases the level of cigarette consumption and lowers the probability of quitting. Social interactions significantly affect individual’s attitude toward smoking. Finally, gender differences are formally tested to verify whether male and female sub-samples can be pooled or should be separately analyzed. The hypothesis of equal consumption parameters is clearly rejected, suggesting the opportunity of distinguishing the consumption patterns of men and women.

Conformism and diversity under social learning

Summary. When there are competing technologies or products with unknown payoffs an important question is which technology will prevail and whether technologies with different payoffs can coexist in the long run. In this paper, we use a social learning model with local interactions to study this question. We show that the adoption of technologies as well as the prospects of conformism/diversity depend crucially on the nature of interaction between individuals and the heterogeneity of preferences in a society. Received: May 10, 1999; revised version: February 4, 2000     

Equilibria in second price auctions with participation costs

We investigate equilibria of sealed-bid second price auctions with bidder participation costs in the independent private values environment. We focus on equilibria in cutoff strategies (participate and bid the valuation iff it is greater than the cutoff), since if a bidder finds it optimal to participate, she cannot do better than bidding her valuation. When bidders are symmetric, concavity (strict convexity) of the cumulative distribution function from which the valuations are drawn is a sufficient condition for uniqueness (multiplicity) within this class. We also study a special case with asymmetric bidders and show that concavity/convexity plays a similar role.     

Innovation and social probable knowledge

In this paper, some elements of Keynes's theory of probabilityare used to understand the process of diffusion of an innovation.Based on work done elsewhere, it is argued that this processcan be viewed as a process of dealing with the collective uncertaintyabout how to sort out a technological problem. Expanding theconcepts of weight of argument and probable knowledge to dealwith this kind of uncertainty, we argue that the concepts ofsocial weight of argument and social probable knowledge canbe very helpful in understanding the process of diffusion ofan innovation.     

Steady states in the OLG model with seignorage and long-lived agents

This note provides a direct proof of the fact that in a particular version of the overlapping generations model with long-lived agents and fiat money, there can be at most two stationary states. A simple argument showing the Pareto superiority of the low inflation steady state is also given.     

Nash Equilibria in Pure Strategies

We consider an n ‐person non‐zero‐sum non‐cooperative game in normal form, where the strategy sets are some closed intervals of the real line. It is shown that if the pay‐off functions are continuous on the whole space and if for each pay‐off function the smallest local maximum in the strategy variable is a global maximum, then the game possesses a pure strategy Nash equilibrium.     

No-arbitrage Equilibria with Differential Information: An Existence Proof

On the example of a pure exchange financial economy with two periods incomplete nominal-asset markets and differential information of the adverse selection’s type, Cornet-De Boisdeffre (J Math Econ 38:393-410, 2002) introduced refined concepts of no-arbitrage prices and equilibria, which extended to the asymmetric information setting the classical concepts of the symmetric information literature. We now assess existence issues and extend a standard property of symmetric information models. Namely, we prove that a no-arbitrage equilibrium always exists, as long as financial markets preclude arbitrage, under the same standard conditions, whether agents have symmetric or asymmetric information.     

The Eisner Puzzle,the Unemployment Threshold and the Range of Equilibria

Using a two-regime model of the inflation-unemployment process for US data 1960:2 to 2000:2, this paper finds strong evidence to support the Eisner puzzle, which occurs when the short-run Phillips curve (SRPC) is flatter at low rates of unemployment than at higher rates. The puzzling aspect of this pattern is the expectation of excess demand to become apparent at very low rates of unemployment causing the SRPC to be steep rather than fairly flat. We show the puzzle can be resolved by estimating a three-regime model which reveals a steep SRPC at very low rates of unemployment. The estimates of the three regime model also reveal a horizontal SRPC at intermediate rates of unemployment, implying the existence of a range of equilibrium rates of unemployment at those intermediate rates.

On non-ergodic asset prices

We investigate the asset prices dynamics and the long-run market shares of two competing financial mediators who are selected by consumers. We demonstrate that the social interaction among consumers constitutes an endogenous path-depending source of risk in a financial market. Depending on consumers’ evaluation of the mediator’s investment, asset prices may behave in a non-ergodic manner: the price process converges in distribution but the limiting distribution is not necessarily uniquely determined, its multiplicity being characterized by the multiplicity of possible long-run market shares. The convergence of the process is sensitive to initial conditions and depends on the history of noise-trader transactions. Long-run portfolio holdings may be in-efficient since investors holding mean-variance efficient portfolios may not be identified.     

On the social structure of markets

Economic theorists have seldom discussed the social structuresbehind markets, even though market trading relies heavily onseller/buyer roles and personal relations among traders. Thispaper considers the structural basis of markets and proposesa layered approach which accommodates a wide range of competitiveand relational trade within a definition of markets that distinguishesthem from non-market exchange. Giving due regard to social structureslays bare the institutional character of markets and providesa rationale for case studies of how particular markets function.     

Demographic structure and growth: The effect of unfunded social security

This paper examines how demographics affect economic growth in an OLG model with unfunded social security. We derive two interesting results. First, the relationship between population growth and per capita output growth is hump shaped. Second, the relationship between life expectancy and per capita output growth is also hump shaped.     

Does Transparency of Central Banks Produce Multiple Equilibria on Currency Markets?

A recent strand of literature shows that multiple equilibria in models of markets for pegged currencies vanish if there is slightly diverse information among traders; see Morris and Shin (2001). It is known that this approach works only if the common knowledge in the market is not too precise. This has led to the conclusion that central banks should try to avoid making their information common knowledge. We develop a model in which more transparency of the central bank implies better private information, because each trader utilises public information according to her own private information. Thus, transparency makes multiple equilibria less likely.     

The number of pure Nash equilibria in a random game with nondecreasing best responses

We randomly draw a game from a distribution on the set of two-player games with a given size. We compute the distribution and the expectation of the number of pure-strategy Nash equilibria of the game conditional on the game having nondecreasing best-response functions. The conditional expected number of pure-strategy Nash equilibria becomes much larger than the unconditional expected number as the size of the game grows.     

Capital accumulation with tangible assets

The paper develops a neoclassical growth model with capital accumulation and a retradable tangible asset in an overlapping generations framework. It analyzes its effect on the dynamics of capital accumulation. Two period lived consumers hold portfolios consisting of real capital and the tangible asset. It is shown that the possibility of trading the tangible asset as an alternative to capital may cause the coexistence of stable steady states with high and low levels of capital and with disjoint basins of attraction. Thus, the so-called poverty trap may appear purely endogenously generated as a consequence of asset trading alone. The possibility of the occurrence of the poverty trap is reduced as factors of production become more substitutable. However, the result is robust for continua of homogeneous as well as heterogeneous consumers.     

加强社保基金管理，提高投资收益

2006年上海社保基金案东窗事发，涉案金额达百亿人民币，由于社保基金牵涉老百姓日后生计，关系到社会稳定，一时之间，该案成为社会关注的焦点。但不可否认，在我国社保资金存在巨大缺口的压力下，将社保基金用于投资赚取收益并没有错。这一案件提醒我们，不能因为社保基金的特殊性，就忽略社保基金的投资管理。随着我国社保基金规模不断变大，投资领域和方式的不断出新，加强社保基金投资管理，非常关键。     

Actions influenced by a social network

A simple framework is presented in which, each period, each of N individuals chooses among K alternatives. Individual actions are interrelated through a social network which arrays the strength of influence of each person on each other person. Emphasis is on the role of the network. The framework accommodates a variety of particular contexts, suggests theorems, and unifies a sizable part of the fragmented literature on network interaction.     

Trust and reciprocity in inter-individual versus inter-group interactions: The effects of social influence, group dynamics, and perspective biases

Using an experimental trust game, I examine whether the perspectives and behavior of group representatives and consensus groups differ from those of the same individuals in an analogous inter-individual situation. A primary goal of this research is to extend past work on trust and reciprocity by examining the impact of the social contexts within which social interactions are characteristically embedded. Specifically, this research concerns whether norms and dynamics of trust and reciprocity differ in the contexts of inter-individual and inter-group interactions. First, I examine whether dynamics of trust and reciprocity differ in various inter-group interactions where inter-group decisions are operationalized as 1) autonomous group representatives, i.e., individuals who are given the responsibility of unilaterally making a decision on behalf of a three-person group engaging with a group representative of another such group; and 2) consensus groups, i.e., group members making a consensus trust or reciprocity decision for their groups via a collective process with another such group. Results of these studies show that 1) people trust less and reciprocate less when responsible for a group or organizational decision as autonomous group representatives; 2) consensus groups do not differ from individuals in their level of trust but show dramatically less reciprocity. The group consensus mechanism in fact produced by far the lowest reciprocity level, significantly lower than that exhibited by either individuals or autonomous group representatives. Thus, inter-group trust and reciprocity dynamics are not readily inferable from their inter-individual counterparts. Moreover, an important implication is emerging here: the extent and direction of the discrepancy between individual and group choices in regard to trust and reciprocity levels and possibly other social preferences in general may depend importantly on the precise details of the group decision-making mechanism, for example whether decisions are made consensually, by majority vote, or by a group leader or representative. In addition to examining the level of trust and reciprocity that occur in these various situations, I also studied, using both behavioral and questionnaire data, the roles of self-interest, social influence, and group dynamics in trust and reciprocity perceptions and behavior. The results showed that there exist discrepancies between behavioral forecasts and the actual behavior, and that trusting behavior is driven strongly by expectation of level of reciprocation, while reciprocating behavior is driven strongly by the difference between trust expectation and actual trust received.     

The marginal pricing rule revisited

The purpose of the paper is to introduce a tighter definition for the marginal (cost) pricing rule. By means of an example, we illustrate the improvements that one gets with the new definition with respect to the former one using Clarke’s normal cone, and we discuss its consequences in terms of the existence of equilibria.