This paper presents a model of general equilibrium stability in which agents understand that they are not at equilibrium. Rather, agents expect prices to change and contemplate the possibility that they may not be able to complete their own transactions. They optimize their actions taking account of such price changes and transaction constraints. It is shown that a necessary condition for instability is the continuing perception of new, previously unforeseen opportunities (real or imagined). Without this, old opportunities will be arbitraged away and the system will converge to equilibrium. The equilibrium approached will depend on the history of the system and may not be Walrasian if transaction constraints are present.

between schooling and wages: Schooling raises wages. The standard empirical questions of when are wages raised and by how much have gone unaddressed. The purpose of this paper is to demonstrate that the conventional efficiency units model of human capital accumulation provides answers to these questions. The model deals with investment both in school and on the job. The existence of post-schooling investment implies a path of wages that rises over time. Proposition 1 is that the marginal impact of schooling on the log of wages at each point in time is a constant equal to the interest rate if and only if the human capital production function is locally unit elastic in accumulated stocks of capital. A constant marginal effect on log wages is what is usually assumed in empirical work. Further, extrapolating from a model with no post-schooling investment, the constant effect is expected to equal the interest rate. Proposition 1 indicates that this assumption severely restricts the underlying structure. Propositions 2 and 3 deal with intertemporal variation in the marginal effect of schooling on wages. For example, if the output elasticity of accumulated stocks in the human capital production function falls short of one, the marginal impact of schooling on log wages is shown to decline over time. Further, under a reasonable additional assumption, the marginal impact of schooling on the level of wages rises over time. The propositions arise from the fact that wealth maximization involves maximization of an appropriately discounted flow of rents. Wages at a point in time provide information on the current flow of rents. The relationship between wealth maximization and the implied optimal pattern of flow rents yields the results. The model is laid out in Section 2. Section 3 deals with optimal schooling choice. Propositions 1-3 are presented in Section 4. In Section 5 the results are employed to discuss several stylized facts in the empirical literature on the wage-schooling relation. Proofs of the propositions are straightforward and are therefore presented in an appendix.

[The purpose of this paper is to provide a method for characterizing efficient allocation processes and efficient allocations for a large class of environments in which asymmetric information is an important factor. This method is based on a rigorous application of statistical decision theory and makes explicit both the information available to agents ex ante and the way in which information is transmitted during any multistage allocation process.]

THE RESEARCH on the economic theory of the cost-of-living index has not paid much attention to the proposals made by Frisch and Wald in the thirties. In Frisch [3,4] the was developed and tested on certain examples. Wald [8] succeeded in deriving a new for the index of cost of living in an article containing a curious editorial footnote by Frisch on the comparative advantages of both methods. Banerjee [1] presented a simplification of the derivation of Wald's new formula. In an article commemorating Frisch, Samuelson [7] asked for a study of the relative merits of Frisch's and Wald's proposals to which he added a variant of his own. Recently Banerjee [2] succeeded in showing that Wald's new formula is the true cost-of-living index for a general quadratic utility function. In this paper I give an alternative, mathematically equivalent but economically more meaningful, derivation which highlights the resemblance of Wald's index to the true cost-of-living index corresponding to the familiar Klein-Rubin-Stone-Geary utility function (Section 2). This derivation provides a convenient framework for discussing Frisch's double-expenditure method (Section 3) and Samuelson's proposal (Section 4) and for assessing the relative merits of them. I hope this note is a (partial) answer to Samuelson's question.

We consider economies with preferences drawn from a very general class of strongly convex preferences, closely related to the class of convex (but intransitive and incomplete) preferences for which Mas-Colell proved the existence of competitive equilibria [13]. We prove a strong core limit theorem for sequences of such economies with a mild assumption on endowments (the largest endowment is small compared to the total endowment) and a uniform convexity condition. The results extend corresponding results in Hildenbrand's book [8]. The proof, which is based on our earlier result for economies with more general preferences [2], is elementary.

This paper presents a model of myopic tastes, both in the context of intertemporal decision making and choice under uncertainty. Infinite dimensional consumption plans arise naturally in both contexts, either involving a denumerable number of periods or a countable number of states of the world. The essential feature of our model is that myopic behavior is formalized by defining topologies, on the space of consumption plans, which discount the future or improbable events.

[This paper extends the empirical version of a job-search model to permit heterogeneity in the location of wage offer distributions. Population variance in wage offers is decomposed into variance due to heterogeneity and variance facing each individual. Heterogeneity is found to be an important source of offer variance in the population. The amount of "pure wage offer dispersion" facing individuals is found to contribute little to population variance.]