We study a framework where two duopolists compete repeatedly in prices and where chosen prices potentially affect future market shares, but certainly do not affect current sales. This assumption of consumer inertia causes (noncooperative) coordination on high prices only to be possible as an equilibrium for low values of the discount factor. In particular, high discount factors increase opportu...

Although tabular reinforcement learning (RL) methods have been proved to converge to an optimal policy, the combination of particular conventional reinforcement learning techniques with function approximators can lead to divergence. In this paper we show why off-policy RL methods combined with linear function approximators can lead to divergence. Furthermore, we analyze two different types of u...

This paper analyzes the impact vertical integration has on upstream collusion when the price of the input is linear. As a first step, the paper derives the collusive equilibrium that requires the lowest discount factor in the infinitely repeated game when one firm is vertically integrated. It turns out this is the joint-profit maximum of the colluding firms. The discount factor needed to sustai...

I propose an S-shaped utility function of consumption which, combined with an heterogeneous agents and external habit setting, fits well the first order moments of the American financial and macroeconomic time series relevant for the equity premium puzzle in the second half of XX century. The average relative risk aversion of the agents remains in the 0-3 range. A "black swan"-kind phenomenon m...

Background:  The objective of the study was to appraise the total dollar value of human life losses (TDVHL) associated with COVID-19 in Canada. Methods: The net output approach (also known as human capital approach) was applied in the dollar valuation of the 6,062 human life losses associated with COVID-19 in Canada as of 23 May 2020. The economic model was rerun five times: (a) using the nati...

The real options approach is used to explain discounted utility anomalies as artifacts of the optimizing behavior of an individual with standard preferences, who perceives the utility from consumption in the future as uncertain. For this individual, waiting is valuable because uncertainty is revealed over time. The fair price (or compensation) that the individual agrees to pay (or accept) today...

We derive a parsimonious returns-based stochastic discount factor that is robust to model misspecification. We consider a general equilibrium model with heterogeneous agents who can invest their wealth in many assets. As long as (i) agents have (individual-, time-, and state-dependent) recursive preferences that are homothetic in current consumption and continuation value with a common relative...

This paper presents a noncooperative coalitional bargaining model with generalized selection of proposers, which includes Chatterjee et al.’s (1993) fixed-order-proposer model and Okada’s (1996) random-proposer model as two extreme special cases. In the model, at each round, proposers are selected according to recognition probabilities, which depend on who rejects a proposal at the previous rou...