We study market breakdown in a finance context under extreme adverse selection with and without competitive pricing. Adverse selection is extreme if for any price there are informed agent types with whom uninformed agents prefer not to trade. Market breakdown occurs when no trade is the only...

This paper investigates the determinants of informal economic activity. We present two equilibrium models of informality and test their implications using a survey of 48,000+ small firms in Brazil. We define informality as tax avoidance; firms in the informal sector avoid tax payments but suffer...

Economic modeling assumes, for the most part, that agents are Bayesian, that is, that they entertain probabilistic beliefs, objective or subjective, regarding any event in question. We argue that the formation of such beliefs calls for a deeper examination and for explicit modeling. Models of...

As current trends of Chinese economic growth and motorization continue, its demand for higher efficiency fuels (oil, gas, and electric power) will increase. This, coupled with China’s limited domestic production, can translate into a massive demand for energy imports. To predict China’s...

This paper develops a unified approach to study participation and voting in multiple elections. The theoretical setting combines an “uncertain-voter” model of turnout with a spatial model of voting behavior. We apply our framework to the study of turnout and voting in U.S. presidential and...

This paper studies the identification of a simultaneous equation model involving duration measures. It proposes a game theoretic model in which durations are determined by strategic agents. In the absence of strategic motives, the model delivers a version of the generalized accelerated failure...

We construct a framework for measuring economic activity at high frequency, potentially in real time. We use a variety of stock and flow data observed at mixed frequencies (including very high frequencies), and we use a dynamic factor model that permits exact filtering. We illustrate the...

This paper examines the equilibrium correspondence in Arrow-Debreu exchange economies with semi-algebraic preferences. We show that a generic semi-algebraic exchange economy gives rise to a square system of polynomial equations with finitely many solutions. The competitive equilibria form a...

This paper investigates the determinants of informal economic activity. We present two equilibrium models of informality and test their implications using a survey of 48,000+ small firms in Brazil. We define informality as tax avoidance; firms in the informal sector avoid tax payments but suffer...

Economic modeling assumes, for the most part, that agents are Bayesian, that is, that they entertain probabilistic beliefs, objective or subjective, regarding any event in question. We argue that the formation of such beliefs calls for a deeper examination and for explicit modeling. Models of...