In the presence of cost uncertainty, limited liability introduces the possibility of default in procurement with its associated bankruptcy costs. When …nancial soundness is not perfectly observable, we show that incentive compatibility implies that …nancially less sound contractors are selected with higher probability in any feasible mechanism. Informational rents are associated with unsound …n...

Economic activity in different industries is linked to each other through aggregate income (horizontal linkages) and input-output relationships (vertical linkages). Could such linkages give rise to vicious circles of underdevelopment or virtuous circles of development when there are increasing returns to scale at the firm level? We show that vicious or virtuous circles based on demand linkages ...

We develop a dynamic industry model with heterogeneous firms and we analyse how financing frictions affect export decisions and industry equilibrium. We show that, in the presence of costly bankruptcy, future expected financing frictions have a strong impact on current export decisions. We use this model to analyse firm dynamics in a sector that opens up to trade. We show that future expected f...

Inspired by the existing work on correlated equilibria and regretbased dynamics in games, we carry out a first exploration of the links between the leading equilibrium concept for (exchange) economies, Walrasian equilibrium, and the dynamics, specifically regret-matching dynamics, of trading games that fit the economic structure and have the property that their pure Nash equilibria implement th...

Minimax lower bounds for concept learning state, for example, that for each sample size n and learning rule gn, there exists a distribution of the observation X and a concept C to be learnt such that the expected error of gn is at least a constant times V=n, where V is the vc dimension of the concept class. However, these bounds do not tell anything about the rate of decrease of the error for a...

The aim of this paper is to explain the wealth distribution in the US economy, in particular the high concentration of wealth at the very top end of the distribution. In the literature it was conjectured that rich households accumulate more wealth (given their income) than what can be explained by standard consumption/saving models. To address this issue, I develop a general equilibrium heterog...

The aim of this paper is to test formally the classical business cycle hypothesis, using data from industrialized countries for the time period since 1960. The hypothesis is characterized by the view that the cyclical structure in GDP is concentrated in the investment series: xed investment has typically a long cycle, while the cycle in inventory investment is shorter. To check the robustness o...

We propose a new theory for downsizing, based on strategic reasons, rather than technological ones. A crisis may lead to a decrease in the willingness to cooperate in an organization, and therefore to a bad equilibrium. A consensual downsizing episode may signal credibly that survivors are willing to cooperate, and thus, it may be optimal and efficiency-enhancing, as the empirical evidence sugg...

1Department of Biotechnological and Applied Clinical Sciences, University of L’Aquila, L’Aquila, Italy 2Parc Sanitari Sant Joan de Déu, Sant Boi de Llobregat, CIBERSAM, Barcelona, Spain 3Sant Joan de Déu Hospital, Esplugues de Llobregat, CIBERSAM, Barcelona, Spain 4Centre d’Higiene Mental Les Corts, Barcelona, Spain 5Department of Mental Health, ASL 01 L’Aquila, Italy *Araya S, Arranz B, Arteag...