Optimal Tariffs and Retaliation with Perfect Foresight

Optimal tariffs, retaliation and the welfare loss from tariff wars in the Melitz model

Coalitional Stability under Perfect Foresight

We analyze strategic social environments where coalitions can form through binding or nonbinding agreements and actions of a coalition may impose externalities upon the welfare of the rest of the players. We define a solution concept that (1) captures the perfect foresight of the players that has been overlooked in the literature (e.g., Harsanyi [10] and Chwe [6]) and (2) identifies the coaliti...

Perfect foresight dynamics in binary supermodular games∗

This paper studies equilibrium selection in binary supermodular games based on perfect foresight dynamics. We provide complete characterizations of absorbing and globally accessible equilibria and apply them to two subclasses of games. First, for unanimity games, it is shown that our selection criterion is not in agreement with that in terms of Nash products, and an example is presented in whic...

Solving The Perfect Foresight CRRA Consumption Model

An Entrepreneur’s Problem Under Perfect Foresight

An Entrepreneur’s Problem Under Perfect Foresight Consider a firm characterized by the following: kt Firm’s capital stock at the beginning of period t f(k) The firm’s total output depends only on k it Investment in period t j(i, k) AdJustment costs associated with investment i given capital k ξt = it + jt eXpenditures (purchases plus adjustment costs) on investment β = 1/R Discount factor for f...