Noisy Rational Expectation Equilibrium with Actively Managed Fund Sector

2014 ◽  
Author(s):  
Thu Truong
Keyword(s):  
Rational Expectation ◽  
Rational Expectation Equilibrium

Offering Money-Back Guarantees in the Presence of Strategic Consumers

2016 ◽  
Vol 7 (3) ◽  
pp. 23-35
Author(s):  
Zhaoqiong Qin ◽  
Charles Mambula ◽  
I-Lin Huang
Keyword(s):  
Numerical Analysis ◽  
Rational Expectation ◽  
Strategic Consumers ◽  
Rational Expectation Equilibrium

This paper studies the benefits of money-back guarantees (MBGs) on the seller under the presence of strategic consumers. The seller initially can offer the MBGs or no-MBGs in the selling season but may sell the leftover inventory at a salvage price without the MBGs at the end of the season. The strategic consumers choose the purchasing timing based on their expected surplus. The authors compare the models of the MBGs offer to no-MBGs in the selling season. By characterizing the rational expectation equilibrium, they find that the seller can charge a higher price in the case of the MBGs offer compared to no-MBGs. Accordingly, the seller's stocking level is higher and thus the seller's profit has the corresponding result. This result explains why MBGs is ubiquitous in the retailing world. The effects of the parameters in the model on the profit benefit are shown in the numerical analysis.

scholarly journals Identify too big to fail banks and capital insurance: An equilibrium approach

2017 ◽  
Vol 7 (4) ◽  
pp. 62-87
Author(s):  
Katerina Ivanov
Keyword(s):  
Systemic Risk ◽  
Rational Expectation ◽  
Innovation Policy ◽  
Risk Measure ◽  
Too Big To Fail ◽  
Market Participants ◽  
Policy Tool ◽  
Equilibrium Approach ◽  
Rational Expectation Equilibrium ◽  
High Level

The objective of this paper is develop a rational expectation equilibrium model of capital insurance to identify too big to fail banks. The main results of this model include (1) too big to fail banks can be identified explicitly by a systemic risk measure, loss betas, of all banks in the entire financial sector; (2) the too big to fail feature can be largely justified by a high level of loss beta; (3) the capital insurance proposal benefits market participants and reduces the systemic risk; (4) the implicit guarantee subsidy can be estimated endogenously; and lastly, (5) the capital insurance proposal can be used to resolve the moral hazard issue. We implement this model and document that the too big to fail issue has been considerably reduced in the pro-crisis period. As a result, the capital insurance proposal could be a useful macro-regulation innovation policy tool.

THE INFLUENCE OF ADRENAL STEROIDS AND CORTICOTROPIN ON MASSIVE MYOCLONIC SEIZURES OF INFANCY

PEDIATRICS ◽  
1963 ◽  
Vol 32 (2) ◽  
pp. 169-174
Author(s):  
Patrick F. Bray
Keyword(s):  
Neurological Deficit ◽  
Prognostic Value ◽  
Rational Expectation ◽  
Initial Response ◽  
Response To Therapy ◽  
Adrenal Steroids ◽  
Focal Neurological Deficit ◽  
Rational Treatment ◽  
Follow Up Study

A 4-year follow-up study is reported on 10 infants whose minor motor seizures were treated intensively with cortisone and/or corticotropin. No correlation was found between the infants' initial clinical and electroencephalographic response to therapy and their follow-up intelligence quotients. The similar initial electroencephalographic findings, contrasted with the marked followup differences in levels of intellectual functioning, illustrate the limited prognostic value of the electroencephalogram in this syndrome. Similarly, no correlation was noted in the patients' initial response to therapy, and the presence or absence of microcephaly or focal neurological deficit. In the absence of any other rational treatment, and despite the dismal prospect suggested by this report and those of others, renewed efforts to treat patients earlier and more intensively with cortisone and corticotropin could be undertaken. However, in the light of 4 years' experience, such an approach might be a reflection more of therapeutic desperation than of rational expectation of good results.

scholarly journals The Formation of Expectations, Inflation, and the Phillips Curve

2018 ◽  
Vol 56 (4) ◽  
pp. 1447-1491 ◽  
Author(s):  
Olivier Coibion ◽  
Yuriy Gorodnichenko ◽  
Rupal Kamdar
Keyword(s):  
Survey Data ◽  
Rational Expectations ◽  
Phillips Curve ◽  
Rational Expectation ◽  
New Keynesian ◽  
Inflation Expectations ◽  
Full Information ◽  
Macroeconomic Modeling ◽  
Expectations Formation

This paper argues for a careful (re)consideration of the expectations formation process and a more systematic inclusion of real-time expectations through survey data in macroeconomic analyses. While the rational expectations revolution has allowed for great leaps in macroeconomic modeling, the surveyed empirical microevidence appears increasingly at odds with the full-information rational expectation assumption. We explore models of expectation formation that can potentially explain why and how survey data deviate from full-information rational expectations. Using the New Keynesian Phillips curve as an extensive case study, we demonstrate how incorporating survey data on inflation expectations can address a number of otherwise puzzling shortcomings that arise under the assumption of full-information rational expectations. (JEL D04, E24, E27, E31, E37)

ROBUST POLICIES IN A STICKY INFORMATION ECONOMY

2010 ◽  
Vol 14 (3) ◽  
pp. 311-342 ◽  
Author(s):  
Francesco Giuli
Keyword(s):  
Monetary Policy ◽  
Phillips Curve ◽  
Rational Expectation ◽  
Policy Instrument ◽  
Optimal Monetary Policy ◽  
Information Economy ◽  
Sticky Information ◽  
Productivity Shocks ◽  
Expectation Model ◽  
Short Run

This paper analyzes the behavior of a central bank under strong (“Knightian”) uncertainty when the short-run trade-off between output and inflation is represented by the sticky information Phillips curve proposed by Mankiw and Reis [Quarterly Journal of Economics 117(4), 1295–1328 (2002)]. By solving the robust control problem analytically, we show why model uncertainty does not affect the optimal monetary policy response to demand and productivity shocks, whereas it causes a stronger reaction of the monetary policy instrument to a cost-push (i.e., markup) shock. Differently from what occurs in sticky price models, the antiattenuation effect can result in a degree of price level stabilization that is greater or less than that experienced in the rational expectation model, depending on the central bank's degree of conservatism. These results dramatically affect the rationale for delegating monetary policy to a central banker more conservative than the society.

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