Uniqueness, Stability, and Comparative Statics in Rationalizable Walrasian Markets

This paper studies the extent to which qualitative features of Walrasian equilibria are refutable given a finite data set. In particular, we consider the hypothesis that the observed data are Walrasian equilibria in which each price vector is locally stable under tatonnement. Our main result shows that a finite set of observations of prices, individual incomes and aggregate consumption vectors is rationalizable in an economy with smooth characteristics if and only if it is rationalizable in an economy in which each observed price vector is locally unique and stable under tatonnement. Moreover, the equilibrium correspondence is locally monotone in a neighborhood of each observed equilibrium in these economies. Thus the hypotheses that equilibria are locally stable under tatonnement, equilibrium prices are locally unique and equilibrium comparative statics are locally monotone are not refutable with a finite data set.

Uncertainty and Risk in Financial Markets

This paper considers a general equilibrium model in which the=20 distinction between un-certainty and risk is formalized by assuming agents= =20 have incomplete preferences over state-contingent consumption bundles, as=20 in Bewley (1986). Without completeness, individual decision making depends= =20 on a set of probability distributions over the state space. A bundle is=20 preferred to another if and only if it has larger expected utility for all= =20 probabilities in this set. When preferences are complete this set is a=20 singleton, and the model reduces to standard expected utility. In this=20 setting, we characterize Pareto optima and equilibria, and show that the=20 presence of uncertainty generates robust indeterminacies in equilibrium=20 prices and allocations for any speci=AFcation of initial endowments. We=20 derive comparative statics results linking the degree of uncertainty with=20 changes in equilibria. Despite the presence of robust indeterminacies, we=20 show that equilibrium prices and allocations vary continuously with=20 underlying fundamentals. Equilibria in a standard risk economy are thus=20 robust to adding small degrees of uncertainty. Finally, we give conditions= =20 under which some assets are not traded due to uncertainty aversion.

What to Maximize If You Must

The assumption that decision makers choose actions to maximize their preferences is a central tenet in economics. This assumption is often justified either formally or informally by appealing to evolutionary arguments. In contrast, this paper shows that in almost every game, payoff. maximization cannot be justified by appealing to such arguments. We show that in almost every game, for almost every distortion of a player's actual payoffs, some extent of this distortion is beneficial to the player because of the resulting effect on opponents' play. Consequently, such distortions will not be driven out by any evolutionary process involving payoff.- monotonic selection dynamics, in which agents with higher actual payoffs proliferate at the expense of less successful agents. In particular, under any such selection dynamics, the population will not converge to payoff- maximizing behavior. We also show that payoff-maximizing behavior need not prevail even when preferences are imperfectly observed.

Telling time with an intrinsically noisy clock

Intracellular transmission of information via chemical and transcriptional networks is thwarted by a physical limitation: the finite copy number of the constituent chemical species introduces unavoidable intrinsic noise. Here we provide a method for solving for the complete probabilistic description of intrinsically noisy oscillatory driving. We derive and numerically verify a number of simple scaling laws. Unlike in the case of measuring a static quantity, response to an oscillatory driving can exhibit a resonant frequency which maximizes information transmission. Further, we show that the optimal regulatory design is dependent on the biophysical constraints (i.e., the allowed copy number and response time). The resulting phase diagram illustrates under what conditions threshold regulation outperforms linear regulation.Comment: 10 pages, 5 figure

Regional governance and bottom-up regional development in the Border Region and County Cavan

This paper investigates the link between regional governance and bottom-up regional development in Ireland. Ireland's approach to regional development has attempted to mirror international best practice, but with little success. Extant literature suggests that the inadequate statutory regional governance provisions and the fragmentation of regional structures of government, semistate agencies and other institutions will frustrate horizontal, vertical and diagonal coordination between actors and, as a result, impede effective bottom-up regional development. The case study of the Border Region and County Cavan provides an in-depth analysis of the levels of horizontal, vertical and diagonal coordination between local, regional and national stakeholders in the preparation and implementation of specific development plans and strategies. The analysis shows that the statutory provisions have strengthened considerably over the years, having a general positive effect on coordination. However, horizontal and diagonal coordination remain weak, impeding the prospects of bottom-up regional development

The dynamic evolution of preferences

This paper develops a general methodology for characterizing the dynamic evolution of preferences in a wide class of strategic interactions. We give simple conditions characterizing the limiting distribution of preferences in general games, and apply our results to study the evolutionary emergence of overconfidence and interdependent preferences. We also show that this methodology can be adapted to cases where preferences are only imperfectly observed