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Schelling (1956) first clarified how power to reduce one’s freedom of choice might benefit a bargaining party. A commitment to reject proposals, when successful, may force concessions from opponents …
Discussion paper
This paper studies the effects of overreaction to recent news for macroeconomic outcomes in the context of a quantitative model of sovereign debt and default. Overreaction is formalized in terms of …
Discussion paper
We establish new efficiency results for decentralized markets with quality uncertainty. Buyers encounter a succession of passing trade opportunities and related asset information, allowing them to …
Discussion paper
After 2008, the Southern European economies suffered a strong and persistent increase in unemployment. Rising government bond spreads necessitated the implementation of austerity policies. Austerity, …
Discussion paper