We consider a decentralized market for an asset (or durable good) where investors’ valuations are heterogeneous and drawn from an arbitrary distribution. We provide a full characterization of the equilibrium, in closed form, both in and out of steady state. We find that investors with moderate valuations tend to specialize in intermediation, so that a “core-periphery” trading network emerges en...

In this paper we study the effect of induced positive mood on price patterns in experimental asset markets. Smith, Suchanek and Williams (1988) in their seminal paper documented bubbles and crashes in experimental asset markets (i.e., prices exceed fundamental value in the beginning and fall towards or below the fundamental value towards the end of the market). Since then, a number of studies h...

We introduce a new approach to bargaining, with strategic and axiomatic foundations, into models of decentralized asset markets. According this approach, which encompasses the Nash (1950) solution as special case, bilateral negotiations follow an agenda that partitions assets bundles be sold sequentially. construct two alternating-offer games consistent characterize their subgame perfect equili...

We build a finite horizon model with inside and outside money, in which interest rates, price levels and commodity allocations are determinate, even though asset markets are incomplete and asset deliveries are purely nominal.

This paper presents the unique black markets of asset pooling and leasing services, which exposes the nature and extent of industry-specific threats. We explore how firms providing such services together with their network structures that constitute the foundations of asset pooling and leasing respond to the threat of black markets. We encapsulate detecting and encountering the threat of black ...