We investigate the circumstances in which business cycle forecasting is beneficial for business by addressing both the short-run and the long-run aspects. For an assessment of short-run forecasting we make a distinction between using publicly available information of cycle probabilities and the...

This note discusses a range of cases where the proposition that one plus one is more or less than two makes sense. Simple examples from the natural world indicate that interaction (reproduction and predator-prey interaction) between addable units can change their sum. A case drawn from commerce...

Putting effort into quality management evidently generates improvements in quality. However, such efforts come with a psychological burden. Working under quality pressure, i.e., extending diligence is burdensome. We hypothesize that this burden is valued differently in different cultures. This...

We study the course of the Swiss price level during the recent episode where Switzerland enforced a floor on the Swiss Franc exchange rate relative to the Euro. Given the strong nominal upward pressure on the Swiss currency the introduced limit of 1.20 Francs per Euro led to a quasi-fixed...

This article describes important determinants of the current financial crisis. In particular, the text focuses on the bounded rationality of banks which contributes to the credit cycle. The credit cycle is the mechanism that links the present financial crisis with earlier crisis. Shortcomings on...

This paper studies how boundedly rational default expectations affect the credit cycle. I propose a simple model of oligopolistic bank competition which serves to compare situations with just a portion of boundedly rational banks to situations where either all banks are rational or all banks are...

We investigate how banks' boundedly rational learning influences their views about default risks over the business cycle. Our analysis details the direction and the magnitude of these effects assuming that banks update probability in a Bayesian way. With a limited experience span lenders are...

Cultural relativism (Boas, 1887) and hedonic relativism (Easterlin, 1974) are reference points of a theory that addresses international differences in per-capita incomes and variations in the contribution of income to happiness. The pivotal concept in this analysis is diligence. Painstaking...

This article studies growth and income inequality with a model that makes transparent the role of initial resource endowments, the savings rate and financing opportunities. The frame of presentation is the so-called Kuznets curve. We show under what circumstances the inverted U-shaped curve...

We study how subjects extrapolate simple patterns in financial time series in order to develop a descriptive model of actual agent behavior. The laboratory experiment for this analysis was conducted in both Germany and Japan. Statistical analyses indicate considerable similarity in expectations...