This paper contributes to the micro-foundation of money in centralized markets with idiosyncratic uncertainty. It shows existence of stationary monetary equilibria and ensures that there is an optimum quantity of money. The rational solution of our model is compared with actual behavior in a laboratory experiment. The experiment gives support to the theoretical approach. JEL classification: C73...

We extend the finite automata approach to evaluate complexity of strategies in iterative adjustment processes such as auctions. Intuitively, a strategy’s complexity is equal to the number of different contingencies in which qualitatively different behaviors are prescribed. Complexity may explain bidder choice of strategies in multi-unit iterative auctions. JEL classification codes: D44, C73

I propose a simple simulation procedure for large games with multiple equilibria. The simulation procedure is based on a best-response dynamic. The implied equilibrium selection mechanism is intuitive: more stable equilibria are selected with higher probability. JEL Codes: C62, C72, C73

We provide a computable algorithm to calculate uniform ε-optimal strategies in two-player zero-sum stochastic games. Our approach can be used to construct algorithms that calculate uniform ε-equilibria and uniform correlated ε-equilibria in various classes of multi-player non-zero-sum stochastic games. JEL codes: C63, C73.

Dynamic entry games are revisited using a Markovian solution concept based on the introduction of long and short time players. This approach provides new insights on the economics of potential competition in particular relative to rent dissipation and selection issues. Potential competition appears less attractive from a normative standpoint. Journal of Economic Literature ClassiÞcation Numbers...

We investigate the issue of strategic substitutability/complementarity in a Cournot differential game with sticky prices. We show that first order conditions do not produce instantaneous best reply functions. However, we identify negatively sloped reaction functions in steady state, with the open-loop best reply being flatter than its closed-loop counterpart. JEL classification: C73, D43, D92, ...

Several recent papers have proposed recursive Lagrangian-basedmethods for solving dynamic contracting problems. Thesemethods give rise to Bellman operators that incorporate either a dual inf-sup or a saddle point operation. We give conditions that ensure the Bellman operator implied by a dual recursive formulation is contractive. JEL codes: C61, C73, D82, E61.

We characterize transitions between stochastically stable states and relative ergodic probabilities in the theory of the evolution of conventions. We give an application to the fall of hegemonies in the evolutionary theory of institutions and con ict and illustrate the theory with the fall of the Qing Dynasty and rise of Communism in China. JEL Classi cation Numbers: C73 (Evolutionary Games)

It is shown that, under the replicator dynamics, all strategies played in correlated equilibrium may be eliminated, so that only strategies with zero marginal probability in all correlated equilibria survive. This occurs in particular in a family of 4 × 4 games built by adding a strategy to a Rock-Paper-Scissors game.  2006 Elsevier Inc. All rights reserved. JEL classification: C73

We show that the folk theorem generically holds for N -player repeated games with private monitoring when each player’s number of signals is su¢ ciently large. Neither cheap talk communication nor public randomization is necessary. Journal of Economic Literature Classi…cation Numbers: C72, C73, D82