We develop a model of information processing and strategy choice for participants in a double auction. Sellers in this model form beliefs that an offer will be accepted by some buyer. Similarly, buyers form beliefs that a bid will be accepted. These beliefs are formed on the basis of observed market data, including frequencies of asks, bids, accepted asks, and accepted bids. Then traders choose...

In liability lawsuits (e.g., patent infringement), a plaintiff demands compensation from defendant, and the parties often negotiate settlement to avoid costly trial. Liability insurance creates bargaining leverage for defendant in this negotiation. We study characteristics of monopoly equilibrium contracts settings where effect is substantial source value insurance. Our results show that under ...

This document describes problems, approaches and solutions in the area of network management, from the TIGER2 point of view. Higher manageability issues are tackled in six areas. 1) The hitless maintenance approach eases the work of the human operator by mastering maintenance tasks through automated processes. 2) The approach for energy aware routing exploits ideas of flow aggregation, and aims...

A perfect-competition model is developed to analyze duality in specialization and technology such as in the men’s clothing industry, an industry with highly seasonal nature of the business cycle. We show that when the market fluctuation is large enough, some firms will specialize in one good with the advantage of static efficiency, while other firms will generalize in multi-variety production a...

A Chamberlin market is a trading institution with multiple traders, decentralized bilateral bargaining and publicly declared transaction prices (Chamberlin (1948)). This paper investigates the determinants of price dynamics in Chamberlin markets as well as double oral auctions. We test and compare the excess supply model (Walras (1874, 1877, 1889, 1896) and the excess rent model (Smith (1962, 1...

We consider a market signaling model in which receivers observe both the sender’s costly signal as well as a stochastic grade that is correlated with the sender’s type. In equilibrium, the sender resolves the trade-off between using the costly signal versus relying on the noisy grade to distinguish himself. When grades are sufficiently informative, separating equilibria do not survive common re...

We present a model of the behavior of an industry in perfect competition. A new feature in the modeling is the consumers’ role in the evolution of the industry. We show a link in between market behavior and economic growth at industry level. Growth may occur due to increases in technology or consumers’ wealth, due to a positive change in consumers’ preferences concerning this good or increasing...

This paper studies resource-allocation mechanisms by using a reduced-form notion of mechanism. We formulate a mechanism by specifying the state space of the mechanism, the set of outcomes that agents can induce in a given state, and the set of admissible outcomes in each state. This notion of mechanism includes the Walrasian mechanism and majority voting as well as all game forms. With this not...