Empirical evidence shows word-of-mouth communication has real effects on trading patterns in financial markets. On top of that, the social network through which the information conveys also plays a crucial role. We propose a framework that allows informed traders to directly and truthfully communicate information in four major social interaction structures represented by circle, tree, star and ...

We introduce a framework for studying the effect of cooperation on the quality of outcomes in utility games. Our framework is a coalitional analog of the smoothness framework of noncooperative games. Coalitional smoothness implies bounds on the strong price of anarchy, the loss of quality of coalitionally stable outcomes, as well as bounds on coalitional versions of coarse correlated equilibria...

This article addresses the problem of how to determine the optimal allocation of public expenditure in the health sector. The first part poses the question: How should the set of services provided in the public health care system and the fees charged for them be chosen to maximize the health status of the population with a fixed budget? First, the findings show that policy reform should take in...

The low price of allowances has been a frequently noted featured of the implementation of the sulfur dioxide emissions market of the U.S. Acid Rain Program. This paper presents theoretical and numerical analyses that explain the gap between expected and observed allowance prices. The main contributing factors appear to be expectation errors augmented by the presence of irreversible investments.

A stricter merger control policy increases the expectation of future price competition. In response, firms increase product differentiation to sustain higher prices. Failing to account for such policy-variant prices may lead to overestimation of the increase in consumer surplus due to the stricter merger policy, rendering the policy analysis subject to the Lucas Critique. D 2004 Elsevier B.V. A...

This paper discusses the evaluation of synergies that derive from the implementation of policy packages designed to promote the use of public transportation and limit traffic congestion in urban areas. In this study, we propose the application of a land-use and transportation integrated (LUTI) model to study the outcomes from the implementation of two policy packages. We apply the long-term str...

An alternative approach to multi-region modeling will be presented. This approach (called modular approach) is able to reproduce results obtained with the traditional as well as a modified Negishi approach. We redesigned the Negishi approach to make it applicable in modeling technological spillovers induced by foreign direct investments. While the modular approach is able to completely internal...

In recent “learning to forecast” experiments (Hommes et al. 2005), three different patterns in aggregate price behavior have been observed: slow monotonic convergence, permanent oscillations, and dampened fluctuations. We show that a simple model of individual learning can explain these different aggregate outcomes within the same experimental setting. The key idea is evolutionary selection amo...

The application of Kalman filtering methods and maximum likelihood parameter estimation to models of commodity prices and futures prices has been considered by several authors. The usual method of finding the maximum likelihood parameter estimates (MLEs) is to numerically maximize the likelihood function. We present, as an alternative to numerical maximization of the likelihood, a filter-based ...

The financial market is nonpredictable, as according to the Bachelier, the mathematical expectation of the speculator is zero. Nevertheless, we observe in the price fluctuations the two distinct scales, short and long time. Behaviour of a market in long terms, such as year intervals, is different from that in short terms. A diffusion equation with a time dependent diffusion coefficient that des...