In dynamic models with multiple equilibria, a central question is how agents coordinate their expectations on a particular outcome. Many dynamic models feature endogenous flexibility: at some cost, agents can adjust their behavior more quickly (e.g., in response to changing market conditions)....

A popular theory of business cycles is that they are driven by animal spirits: shifts in expectations brought on by sunspots. Two prominent examples are Diamond (JPE, 1982) and Howitt and McAfee (AER, 1992). We show that these models have unique equilibria if there are payoff shocks of any size....

A panel study reveals that an increase in pretax income equality leads to sudstantially lower retail prices. Prices also fall if the income tax on high income families is raised. One explanation is that equality makes consumer demand more elastic. This would imply that progressive taxation helps...

The new decade has been called "the age of information." We show that, although information has become more accessible, the increase in the variety of products has made consumers' choices complex and uncertain. Faced with uncertainty about products' attributes offered by "umbrella brands,"...

n this paper we investigate the implementation problem arising when some of the players are ``faulty" in the sense that they fail to act optimally. The exact number and identity of the faulty players is unknown to the planner and to the nonfaulty players, but it is common knowledge that there...

This paper is the Schwartz Memorial Lecture, delivered at Kellogg, Northwestern University in May 1998. The lecture introduces some ideas about the possible use of tools taken from the economics literature to explain language phenomena. Two specific issues are discussed: From the domain of...

This paper presents an empirical study of spatial competition and a methodological approach to estimating product characteristics and consumer preferences in industries with products whose characteristics are unobservable or difficult to measure.We demonstrate the effective use of panel data on...