The Uses of Teaching Games in Game Theory Classes and Some Experimental Games

The results are presented from several experiments. They include the selection of points in the core, interpersonal comparisons of utility, and the reconsideration of Stone results on prominence in contrast with symmetry.Gaming, game theory, fair division, core

The Theory of Money and Financial Institutions

A sketch of a game theoretic approach to the Theory of Money and Financial Institutions is presented in a nontechnical, nonmathematical manner. The detailed argument and specifics are presented in previous articles and in a forthcoming book.

Innovation and Equilibrium?

A discussion is given of the problems involved in the formal modeling of the innovation process. The link between innovation and finance is stressed. The nature of how the circular flow of funds is broken and the role of finance in evaluation and control is discussed.Innovation, Invention, Circular flow, Finance

Fiat Money and the Efficient Financing of the Float, Production and Consumption. Part I: The Float

The basic distinction in the optimization conditions between the general equilibrium model of a T period exchange economy and a strategic market game process model is between a set of equations homogeneous of order zero and a set of nonhomogeneous equations. The latter have an amount M of outside or fiat money added to the system. If there is an outside bank willing to lend or accept deposits at an interest rate rho > 0 at the end of time T the initial amount of money M will have been consumed in interest payments to the outside bank. The price level is fully determined and in an economy where all assets are traded, the float is financed efficiently, otherwise there is a price wedge between buying and selling prices.Fiat money, float, strategic market games

The Edgeworth, Cournot and Walrasian Cores of an Economy

Three variations of the core of a market game representing an exchange economy are considered and compared. The possibility for utilizing the Walrasian core to reflect certain monetary phenomena is noted.Market games, Strategic market game, Exchange economy, Core, Characteristic function

Money and the Monetization of Credit

The relationship between money and credit is discussed in terms of network linkage. Fiat money is the only instrument with the universal recognition of its issuer. Near monies such as bank money and money substitutes such as gasoline credit cards can be classified in terms of their network links. This leads to a way of considering the velocity of money.Credit, fiat money, networks, trust, velocity

A Double Auction Market: Teaching, Experiment and Theory

A simultaneous double auction market with bid and offer cards was utilized in classes on the theory and history of money and financial institutions and occasionally in classes on the theory of games. The prime purpose in using this game was to teach the students how to construct process models of economic phenomena. The second purpose was to consider the properties of the double auction market. The third purpose was to interpret the experimental results an link them to theory.Double auctions, Experimental games, Allocation games, Noncooperative equilibria

"The 'Unintended Consequences' Game"

A simple consideration of history tells us that each new piece of legislation contains loopholes that benefit a new class of entrepreneurs; some of these loopholes are small, but others are such that one could drive a bullion-laden truck through them. In this new Policy Note, Martin Shubik suggests creating a “war gaming group” to stress-test all major new legislation, with a first prize of $1 million to be awarded to the competing lawyer or team of lawyers who finds the most egregious loophole—a small amount relative to the potential savings.

"A Crisis in Coordination and Competence"

The ad hoc emergency approach to the current economic crisis has a great chance of wasting billions of dollars by mismatching skills and needs. According to Martin Shubik of Yale University, the current deepening recession needs a "quick fix" solution now, but a longer-fix solution must be put into place along with it. There is already considerable talk about the possible need for a large public works program to follow the massive infusion of funds into the financial and automobile sectors. But who is going to manage it? For us to weather this great economic storm we need to line up and coordinate (at least) four sets of highly different talents--political, bureaucratic, financial, and industrial. Without their coordination, economic recommendations, no matter how good they may appear to be in theory, will fail in execution.