We extend the standard public good provision model to allow players to either like or dislike the public characteristic. Those who dislike it are able to take actions to reduce its level. We present conditions under which the existence of a unique noncooperative equilibrium is retained, and...

Recent international climate negotiations suggest that complete agreements are unlikely to materialize. Instead, partial cooperation between like-minded countries appears a more likely outcome. In this paper we analyze the effects of such partial cooperation between like-minded countries. In...

This paper studies the behavior of a central bank that seeks to conduct policy optimally while having imperfect credibility and harboring doubts about its model. Taking the Smets-Wouters model as the central bank.s approximating model, the paper's main findings are as follows. First, a central...

Moving average and stochastic volatility are two important components for modeling and forecasting macroeconomic and financial time series. The former aims to capture short-run dynamics, whereas the latter allows for volatility clustering and time-varying volatility. We introduce a new class of...

The financial crisis of 2007 – 2009 began with a major failure in credit markets. The causes of this failure stretch far beyond inadequate mathematical modeling (see Donnelly and Embrechts [2010] and Brigo et al. [2009] for detailed discussions from a mathematical finance perspective)....

In this paper, I investigate the origins of social trust within Vietnam. By combining a unique contemporary survey of households with historical data on weather variation, I show that individuals who are heavily threatened by negative weather fluctuation exhibit more trust in neighbours and...

We study an overlapping-generations model with private externalities on a public good (e.g. the environment). Emergent politico-economic equilibria, depending on model primitives (e.g. the degree of externality), imply that average income and environmental outcomes may be related positively or...

The paper addresses one of the disappointments that the liberal has faced intermittently over the past two hundred years: the apparent lack of relish by the public at large for democracy.

We build a model of credit card payments where the retailers are allowed to charge differential prices depending on the instrument of payment chosen by the consumer. We follow the approach in Rochet and Wright (2010) but assume a credit card system without any type of non-surcharge rule. In a...

In the context of partitional knowledge models, we prove that, in a monotonic model, any cycle equation can be obtained as the product of cycle equations corresponding to cycles of length two. Hence, if a model is monotonic, has finite states, and players' posteriors satisfy all cycle equations...