The economic crisis is also a crisis for economic theory. Most analyses of the evolution of the crisis invoke three themes, contagion, networks and trust, yet none of these play a major role in standard macroeconomic models. What is needed is a theory in which these aspects are central. The...

1. Introduction -- 2. The structure of interaction -- 3. Fish markets : an example of the emergence of aggregate coordination -- 4. Financial markets: bubbles, herds and crashes -- 5. Public goods : a coordination problem -- 6. Segregation : Schelling's model -- 7. Conclusion.

Recent studies suggest that the type of strategic environment or expectation feedback may have a large impact on whether the market learns the rational fundamental price. We present an experiment where the fundamental price experiences large unexpected shocks. Markets with negative expectation...

We show that incomplete cartels in quantity-setting oligopolies may increase welfare, without any efficiencies or synergies being internalized by cartel formation. The main intuition is that the cartel has an incentive to contract output and that the firms outside the cartel react to this by...

Recent studies suggest that the type of strategic environment or expectation feedback can have a large impact on whether the market can learn the rational fundamental price. We present an experiment where the fundamental price experiences large unexpected shocks. Markets with negative...