Paper # Author Title  
We consider the problem of two agents bargaining over the relative price of two goods they are endowed with. They alternatingly exchange price offers and the utilities are discounted. The recipient of an offer can either accept it and choose the quantities to be traded, or reject and counter- offer a different relative price. We study the set of equilibria as discounting frictions vanish and find that: (1) any generic economy has bargaining equilibria that are inefficient even as discounting frictions vanish; and (2) a bargaining equilibrium converging to a Walrasian outcome exists for some robust types of convergence of the discount factors, but it does not exist for other equally robust convergences. Moreover, in case there exists a bargaining equilibrium converging to a Walrasian outcome, then there is necessarily a multiplicity of them. As a consequence, unlike in Rubinstein’s (1982) alternating-offer bargaining, the equilibrium outcome of this set-up is not generically unique and efficient. Download Paper
This paper re-examines the conditions for the existence of local stationary sunspot equilibria (SSE) in the standard OLG model from a broader perspective than before. We say that local SSE exist around a steady state of a given OLG economy if, in any arbitrarily small neighborhood of the steady state, we can find a SSE of a “nearby” economy. We show that when the domain where “nearby” economies may lie is defined by agents’ endowments and probabilities, the indeterminacy of the steady state remains both necessary and sufficient for the existence of local SSE. On the other hand, when the domain of economies is defined by by agents’ preferences and probabilities, local SSE may exist even around determinate steady states. We also show that if a slightly weaker notion of distance is used to identify “nearby” economies, SSE in the vicinity of a steady state equilibrium generically exist. Download Paper
This paper considers a class of two players games in the unit square for which a similar and high enough responsiveness of each player’s strategy to the other player’s strategy around a Nash equilibrium in pure strategies implies (i) the existence of at least two other Nash equilibria in pure strategies; (ii) the non local uniqueness of the strategies of this Nash equilibrium in the sets of rationalizable strategies; and (iii) the existence of nontrivial correlated equilibria arbitrarily close to this Nash equilibrium. Although a similar result can be shown to follow from Milgrom and Roberts’ (1990) results for supermodular games, the games considered here are not necessarily supermodular, which makes clear that supermodularity is not necessary to obtain it. The simultaneous emergence of phenomena of multiplic- ity, instability and vulnerability to sunspots studied in this paper parallels similar patterns observed in other frameworks (e.g. overlapping generations economies and finite economies with asymmetric information), and thus hints at the existence of an underlying relation between different avatars of the indeterminacy of the outcome of economies and games that goes beyond the boundaries of any specific framework and may be common to every decision-making problem faced of simultaneous, independent and interrelated optimizers. Download Paper
This paper shows the general reversibility of every perfect foresight equilibrium of an overlapping generations economy. It then shows and characterizes the existence of reversible sunspot equilibria in these economies as well, which seems to be at odds with our intuition about the irreversibility of a tree of events. Although the paper establishes also that such reversible stochastic equilibria constitute a negligible subset of all the equilibria of their class, their mere existence may be considered somewhat puzzling for this intuition. Download Paper
This paper establishes in a general way the existence of a connection between the stationary equilibria of an infinite horizon economy and the equilibria of a naturally related finite economy. More specifically, the connection is established first between the cycles of a stationary overlapping generations economy and the equilibria of a related finite economy with a cyclical structure. Then the connection is shown to hold also when extrinsic uncertainty (a sunspot) is introduced in the models. The connection holds in this case between a kind of sunspot equilibria called here sunspot cycles, and the correlated equilibria of the finite economy when there is asymmetric information about the extrinsic uncertainty. Incidentally, the sunspot cycles constitute a class of sunspot equilibria that are able to generate time series fluctuating in the recurrent but irregular way characteristic to some economic time series. Download Paper