Commitment in monetary policy leads to equilibria that are superior to those from optimal discretionary policies. A number of interest rate reaction functions and instrument rules have been proposed to implement or approxmiate commitment policy. We assess these optimal reaction functions and...

We study the development of bargaining behavior in children age seven through 18, using ultimatum and dictator games. We find that bargaining behavior changes substantially with age and that most of this change appears to be related to changes in preferences for fairness, rather than bargaining...

The paper analyzes the choice of an exchange rate regime for a small open economy indebted in foreign currency, incorporating the ¯nancial accelerator. Conventional wisdom suggests that floating regimes should insulate the economy from real shocks. I show that this result depends on the...

We examine rewards and punishments in a simple proposer-responder game. The proposer first makes an offer to split a fixed-sized pie. According to the 2×2 design, the responder is or is not given a costly option of increasing or decreasing the proposer's payoff. We find substantial demands for...

Willingness to pay for climate change mitigation depends on people's perceptions about just how bad things will get if nothing is done. Individual subjective distributions for future climate conditions are combined with stated preference discrete choice data over alternative climate policies to...

Determining the productivity of individual workers engaged in team production is difficult. Monitoring expenses may be high, or the observable output of the entire team may be some single product. One way to collect information about individual productivity is to observe how total output changes...

We investigate both the rational explosive inflation paths studied by (McCallum 2001), and the classification of fiscal and monetary polices proposed by (Leeper 1991), for stability under learning of the rational expectations equilibria (REE). Our first result is that the fiscalist REE in the...

We consider the stability under adaptive learning of the complete set of solutions to the model x_i=beta(Ei*)(x_i+1) when |beat| 1. In addition to the fundamentals solution, the literature describes both finite-state Markov sunspot solutions and autoregressive solutions depending on an arbitrary...

We consider a linear stochastic univariate rational expectations model, with a predetermined variable, and provide alternative representations of SSEs (stationary sunspot equilibria). For a strict subset of the parameter space there exist SSEs that are locally stable under least squares learning...