A fundamental problem for government is how to combine commitment to certain policies with the flexibility required to adjust themwhen needed. Rogoff (1985) [Rogoff, K., 1985. The optimal degree of commitment to an intermediate monetary target, Q. J. Econ. 100(4) 1169–1189] showed that a way to strike the right balance is to appoint an optimally bconservativeQ policy-maker. In real life, howeve...

This paper describes an application of recently developed qualitative reasoning techniques to complex, socio{economic allocation problems. We explain why we believe traditional optimization methods are inappropriate and how qualitative reasoning could overcome some of these shortcomings. A case study is presented where an authority is expected to devise a policy that satis es certain constraint...

We interpret the Open Method of Coordination (OMC), recently adopted by the EU as a mode of governance in the area of social policy and other fields, as an imitative learning dynamics of the type considered in evolutionary game theory. The best-practise feature and the iterative design of the OMC correspond to the behavioral rule “imitate the best.” In a redistribution game with utilitarian gov...

System Dynamics’ (SD) main aim is to study dynamic behavior of systems based on causal relations. The other purpose of the science is to design policies, both in initial values and causal relation, to change system behavior as we desire. Especially we are interested in making system’s behavior a convergent one. Although now SD is mainly used in situations of single policy maker, there are major...

This paper describes an application of recently developed qualitative reasoning techniques to complex, socioeconomic allocation problems. We explain why we believe traditional optimization methods are inappropriate and how qualitative reasoning could overcome some of these shortcomings. A case study is presented where an authority is expected to devise a policy that satisfies certain constraint...

This paper derives optimal perfect hedging portfolios in the presence of transaction costs within the binomial model of stock returns, for a market maker that establishes bid and ask prices for American call options on stocks paying dividends prior to expiration. It is shown that, while the option holder's optimal exercise policy at the ex-dividend date varies according to the stock price, ther...

With the changing economic circumstances confronting their countries, regionally concentrated minorities have been facing a strategic problem, important aspects of which can be stylized as a situation in which a minority leader is uncertain about the costs of secession for her community. This paper shows that this uncertainty is a central cause of secession, using a model which incorporates bot...

Many aspects of social welfare are intrinsically multidimensional. Composite indices attempting to reduce this complexity to a unique measure abound in many areas of economics and public policy. Comparisons based on such measures depend, sometimes critically, on how the different dimensions of performance are weighted. Thus, a policy maker maker may wish to take into account imprecision over co...

In this paper we propose straightforward extensions of multi-union, monopolistic competition models appearing in the recent literature on the macroeconomic effects of monetary policy. We extend these models from the Stackelberg equilibrium to the Nash equilibrium under variations in labor market regime in order to evaluate propositions about non-neutrality of monetary policy. JEL Classification...

Recently, there has been a growing interest in modeling planning with information constraints. Accordingly, an agent maximizes a regularized expected utility known as the free energy, where the regularizer is given by the information divergence from a prior to a posterior policy. While this approach can be justified in various ways, including from statistical mechanics and information theory, i...