We describe and compare several algorithms for approximating the solution to a model in which inequality constraints occasionally bind. Their performance is evaluated and compared using various parameterizations of the one sector growth model with irreversible investment. We develop parameterized expectation algorithms which, on the basis of speed, accuracy and convenience of implementation, ap...

Computation of exact equilibrium values for n-player divide-the-dollar legislative bargaining games as in Baron and Ferejohn (1989) with general quota voting rules, recognition probabilities, and discount factors, can be achieved by solving at most n bivariate square linear systems of equations. The approach recovers Eraslan’s (2002) uniqueness result and relies on a characterization of equilib...

This paper introduces assets for which the intrinsic value is endogenous to the amount of funding attracted. A Rational Expectations Equilibrium is developed. Additionally, simulations of the model based on bounded rationality explore the different market behavior under fundamental and momentum based investing strategies. Both strategies produce herding characteristics. The herding under the fu...

What are the consequences of making bids and offers in the book available to traders in a call market? This is a problem in market design. We employ a computational mechanism design methodology to attack this problem and find that allocative efficiencies are higher in a closed book design. We validate our computational approach by running a series of tests with human subjects in exactly the sam...

We present an agent-based model of a multi-tier energy market. We show how reward interdependence between strategic business units within a vertically integrated firm can increase its profits in oligopolistic energy markets. The effects are shown to be distinct from those of the raising rivals’ costs model. In our case, higher prices relate to the nature of energy markets, which facilitate the ...

This paper shows how to compute a second-order accurate solution of a non-linear rational expectation model using algorithms developed for the solution of linear rational expectation models. The result is a state-space representation for the realized values of the variables of the model. This state-space representation can easily be used to compute impulse responses as well as conditional and u...

In this paper, we study out-of-equilibrium dynamics with decentralized exchange (bilateral bargaining between randomly matched pairs of agents). We characterise the conditions under which out-of-equilibrium trading convergences to efficient allocations even when agents are myopic and have limited information and show, numerically, that the rate of convergence to efficient allocations is exponen...

In this paper, we study out-of-equilibrium dynamics with decentralized exchange (bilateral bargaining between randomly matched pairs of agents). We characterise the conditions under which out-of-equilibrium trading convergences to efficient allocations even when agents are myopic and have limited information. We show, numerically, that the rate of convergence to efficient allocations is exponen...

This paper uses laboratory experiments to directly test a central prediction of disclosure theory: that strategic forces can lead those who possess private information voluntarily provide it. In simple sender-receiver game, we find senders disclose favorable information, but withhold unfavorable information. The degree which is strongly related their stated beliefs about receiver actions, and a...

This paper provides a non-symmetric generalization of the position value for communication situations. The definition of the weighted position value is motivated by the two different kinds of asymmetry in communication situations. It is shown that the weighted position value is characterized by component efficiency and a modification of balanced link contributions that is used by Slikker (Inter...