Competitive rational expectations models have the unsatisfactory property, dubbed the “schizophrenia” problem by Hellwig, that each trader takes the equilibrium price as given despite the fact that he influences that price. An examination of information aggregation in a non-competitive rational expectations model using a Nash equilibrium in demand functions shows that the schizophrenia problem is avoided by having each trader take into account the effect his demand has on the equilibrium price. Given a distribution of private information across traders, prices reveal less information than in the competition equilibrium, and prices no longer become fully informative in the limit as noise trading vanishes or as traders become risk neutral. With small traders, the model may become one of monopolistic competition, not perfect competition. In contrast to the competitive model, a reasonable model of endogenous acquisition of costly private information is obtained, even when traders are risk-neutral.

An identified model is not necessary for statistical inference, but ambiguities can arise. This paper examines some simple examples and proposes a framework that distinguishes between the “refutation” and “confirmation” aspects of testing in an unidentified model. One particular problem is the interpretation given to overidentifying restrictions: a common view is that these are somehow not properly testable.

The natural growth rate of most renewable resource stocks is in part stochastic. This paper examines the implications of such ecological uncertainty for competitive equilibrium in a market with property rights. We show that stochastic fluctuations add a risk premium to the rate of return required to keep a unit of stock in situ, and we examine the effects of fluctuations on resource rent. Examples are used to show that extraction can increase, decrease, or be left unchanged as the variance of the fluctuations increases, depending on the extent of market "self-correction". Regulatory implications are also discussed.

This paper is concerned with the design of non-cooperative game forms for economic decision problems. A decision problem is presented which admits non-dictatorial game forms with the following properties: Nash equilibria exist and all Nash equilibrium outcomes are Pareto optimal; or dominant strategies exist and all dominant strategy equilibria are Pareto optimal; but not both. This is, any (non-dictatorial) game form whose Nash equilibria are well behaved does not have dominant strategies, and any game form with well behaved dominant strategy equilibria must have at least one non-optimal non-dominant strategy Nash equilibrium.

Much attention in the theory of revealed preference has been devoted to the problem of demand functions generated from continuous utility functions. First Samuelson (1938), the originator of the theory of revealed preference, presented assumptions for P2+. Later Houthakker (1950) developed this model of consumer's behaviour for the n-dimensional case. A gap in Houthakker's proof has been recently closed by B. Stigum (1973). Uzawa (1960) presented a different version of Houthakker's theorem. His conditions AI-AIV and the Strong Axiom of Revealed Preference establish the existence of an upper semicontinuous utility function generating the given demand function. Uzawa's query whether these conditions guarantee the existence of a continuous utility function was answered in the negative by a counterexample of Hurwicz and Richter (1971). At approximately the same time E. Gordon (1971) published an article in the Review of Economic Studies where he tried to demonstrate that the axioms AI-AIV and the Strong Axiom do imply the existence of a continuous utility function. Unfortunately the proof of his Proposition 3 (p. 327) contains an error which led to this wrong conclusion. The purpose of this paper is to correct Gordon's theorem by adding conditions which are essentially due to Stigum. We will see that supporting hyperplanes play an important part in the method of the proof. The correction of Gordon's proof, based on results of Uzawa, turns out to be another method to prove Houthakker's theorem.

Journal Article Labour Unions and the Wage Structure: A General Equilibrium Approach Get access John S. Pettengill John S. Pettengill University of Virginia Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 46, Issue 4, October 1979, Pages 675–693, https://doi.org/10.2307/2297035 Published: 01 October 1979 Article history Received: 01 September 1975 Accepted: 01 November 1978 Published: 01 October 1979

Journal Article A Note on Feldstein's Criticism of Mean-Variance Analysis: A Reply Get access Martin S. Feldstein Martin S. Feldstein Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 45, Issue 1, February 1978, Page 201, https://doi.org/10.2307/2297095 Published: 01 February 1978

Journal Article On Stochastic Entry and Exit without Expectations Get access Frederick S. Inaba Frederick S. Inaba Washington State University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 45, Issue 3, October 1978, Pages 535–545, https://doi.org/10.2307/2297255 Published: 01 October 1978 Article history Received: 01 February 1976 Accepted: 01 July 1977 Published: 01 October 1978

Journal Article On the Dynamic Behaviour of the Consumer and the Optimal Provision of Social Security Get access Sheng Cheng Hu Sheng Cheng Hu Purdue University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 45, Issue 3, October 1978, Pages 437–445, https://doi.org/10.2307/2297246 Published: 01 October 1978 Article history Received: 01 October 1976 Accepted: 01 June 1977 Published: 01 October 1978