Recent evidence suggests that agents’ expectations may have played a role in several cycli¬cal episodes such as the U.S. "new economy" boom in the late 1990s, the real estate boom in Japan in the 1980s and the real estate boom in the U.S. which ended in 2008. One chal¬lenge in the...

Consider a two-player discounted repeated game in which each player optimizes with respect to prior beliefs about his opponent's repeated game strategy. One would like to argue that if beliefs are cautious then players will learn as the game unfolds to predict the continuation path of play. If...

The paper re-examines the efficiency hypothesis in the foreign exchange market. The traditional efficiency testing equations are reviewed and a model is developed that incorporates Bayesian revisions in the form of devaluation expectations. A number of propositions regarding the pattern of the...