We analyze high-frequency micro panel data on customers of a major Korean credit card company before and after the 2003 Korean credit crisis and find evidence of pervasive precommitment behavior that is difficult to explain using standard economic theories: (1) customers voluntarily reduce their credit card borrowing limits without any compensation, (2) customers turn down interest-free installment loan offers with high probability, and (3) of the small fraction of customers who do accept interest-free loan offers, most precommit to pay off the loan over a shorter term than the maximum allowed term under the offer.

We present a model in which the microstructure of trade in a commodity or asset is endogenously determined. Producers and consumers of a commodity (or buyers and sellers of an asset) who wish to trade can choose between two competing types of intermediaries: “middlemen” (dealer/brokers) and “market makers” (specialists). Market makers post publicly observable bid and ask prices, whereas the prices quoted by different middlemen are private information that can be obtained only through a costly search process. We consider an initial equilibrium with which there are no market makers but there is free entry of middlemen with heterogeneous transactions costs. We characterize conditions under which entry of a single market maker can be profitable even though it is common knowledge that all surviving middlemen will undercut the market maker’s publicly posted bid and ask prices in the postentry equilibrium. The market maker’s entry induces the surviving middlemen to reduce their bid‐ask spreads, and as a result, all producers and consumers who choose to participate in the market enjoy a strict increase in their expected gains from trade. When there is free entry into market making and search and transactions costs tend to zero, bid‐ask spreads of all market makers and middlemen are forced to zero, and a fully efficient Walrasian equilibrium outcome emerges.

Do the world’s best tennis pros play Nash equilibrium mixed strategies? We answer this question using data on serve-direction choices (to the receiver’s left, right, or body) from the Match Charting Project. Using a new approach, we test and reject a key implication of a mixed-strategy Nash equilibrium: that the probability of winning the service game is identical for all possible serve strategies. We calculate best-response serve strategies by dynamic programming (DP) and show that for most elite pro servers, the DP strategy significantly increases their win probability relative to the mixed strategies they actually use.

We revisit the comparison of mathematical programming with equilibrium constraints (MPEC) and nested fixed point (NFXP) algorithms for estimating structural dynamic models by Su and Judd (SJ, 2012). Their implementation of the nested fixed point algorithm used successive approximations to solve the inner fixed point problem (NFXP-SA). We re-do their comparison using the more efficient version of NFXP proposed by Rust (1987), which combines successive approximations and Newton-Kantorovich iterations to solve the fixed point problem (NFXP- NK). We show that MPEC and NFXP are similar in speed and numerical performance when the more efficient NFXP-NK variant is used.

We introduce a computationally tractable dynamic equilibrium model of automobile markets with heterogeneous consumers, focused on stationary flow equilibria. We introduce a fast, robust algorithm for computing equilibria and use it to estimate a model using nearly 39 million observations on car ownership transitions from Denmark. The estimated model fits the data well, and counterfactual simulations show that Denmark could raise total tax revenue by reducing the new-car registration tax rate. We show that reducing this tax rate while raising the tax rate on fuel increases aggregate welfare, tax revenue, and car ownership, while reducing car ages, driving, and CO2 emissions.