Knowledge that Transforms

On decrit une representation tabulaire simplifiee qui fait ressortir une hypothese structurale implicite importante dans des modeles de selection bases sur la censure

An action in an extensive game that has a suboptimal payoff in every sequential equilibrium is said to be useless. There are sequential equilibria in which beliefs at each information set assign positive probability only to those nodes reached by the fewest useless actions. An action is second order useless if it is not useless but is strictly suboptimal in every equilibrium satisfying this condition on beliefs, and there exist sequential equilibria in which beliefs assign positive probability only to those nodes reached by the fewest useless actions, and, in this set, only those nodes requiring the fewest second order useless actions. Higher order uselessness is defined inductively, and beliefs satisfying the associated sequence of conditions are said to be justifiable. The existence of sequential equilibria with justifiable beliefs is demonstrated.

[Caves and Christensen [16] have provided a procedure for displaying the regular regions of a flexible functional form in the 2-good homothetic and nonhomothetic cases and in the 3-good homothetic case. We extend the procedure to the nonhomothetic 3-good case, and we apply the extended procedure to the translog, generalized Leontief, and minflex Laurent flexible functional form. In addition, we acquire the regular regions for the minflex Laurent model in the 2-good nonhomothetic case and superimpose the resulting regions on those already found by Caves and Christensen for the translog and generalized Leontief models. We find that the new minflex Laurent model generally has the largest regular regions of the three flexible functional forms. In addition, the regular region of the minflex Laurent model is found to expand as real income increases. As a result, that model is particularly well suited for use with time series data, which typically is characterized by positive long term growth trends in real income. In such applications, all recent data and future forecasts can be expected to lie within the regular region of the minflex Laurent model. Although it is possible for some of the earliest data to fall outside that regular region, the model's regular region nevertheless is sufficiently large to hold even all of those earliest data points in many data sets. The regular region of each of three models moves when the model's parameters are changed. With the generalized Leontief or translog model, the regular region's shape, location, and size are unpredictable without prior knowledge of the model's parameters. With either of those two models, the intersection of the model's regular regions, as the parameters are changed, is contained within a very small neighborhood of the one point at which we require the model to be regular. With the minflex Laurent model, the primary properties of the regular regions are invariant to the values of the parameters, and the intersection of the displayed regular regions is a very large unbounded set. The width of that intersection increases without limit as real income increases.]

Different definitions of noncausality (according to Granger, Sims, Haugh and Pierce,...) are analyzed in terms of orthogonality in the Hilbert space of square integrable variables. Conditions, when necessary, are given for their respective equivalence. Some problems of testability are mentioned. Finally noncausality is also analyzed in terms of rational expectations, extending previous results of Sims. (Author)

We study subgame perfect equilibria of finitely repeated games. We prove a limit "folk theorem" for these games. Under weak conditions, any feasible and individually rational payoff vector of the one-shot game can be approximated by the average payoff in a perfect equilibrium of a repeated game with a sufficiently long horizon.

This article surveys the development of nonparametric models and methods for estimation of choice models with nonlinear budget sets.The discussion focuses on the budget set regression, that is, the conditional expectation of a choice variable given the budget set.Utility maximization in a nonparametric model with general heterogeneity reduces the curse of dimensionality in this regression.Empirical results using this regression are different from maximum likelihood and give informative inference.The article also considers the information provided by kink probabilities for nonparametric utility with general heterogeneity.Instrumental variable estimation and the evidence it provides of heterogeneity in preferences are also discussed.

[A tractable dynamic general equilibrium model of continuous product innovation is developed. Patents, or any imitation lag, of infinite duration may achieve too much, too little, or the socially optimum level of innovation. Most surprising, finite-life patents may induce undamped oscillations in innovation.]

[The rational expectations hypothesis in a life cycle context asserts that agents seek to keep the marginal utility of discounted expenditure constant across time. In this paper we present estimates of a demand system that takes explicit account of this hypothesis. We show how the restrictions from demand theory enable us to identify the model despite the presence of an unobservable variable that can be interpreted as revisions to the marginal utility of discounted expenditure. This allows us to take explicit account of the different effects of anticipated and unanticipated price changes. An important check on our model is the derivation of expenditure elasticities despite the fact that the demand system does not have expenditure on the right hand side. Our estimates are "sensible" and we find that we can reject the hypothesis that revisions to the marginal utility of discounted money are orthogonal to the past values of our variables. We interpret this to be a rejection of the rational expectations hypothesis.]