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Applying unawareness belief structures introduced in Heifetz, Meier, and Schip-per (2013a), we develop Bayesian games with unawareness, define equilibrium, and prove existence. We show how equilibria are extended naturally from lower to higher awareness levels and restricted from higher to lower awareness levels. We apply Bayesian games with unawareness to… (More)
We argue that US welfare would rise if unemployment insurance were to be increased for young workers and decreased for old. This is because young workers have little means to smooth consumption during unemployment, and want jobs to accumulate high-return human capital. So unemployment insurance is highly valuable to them while the induced moral hazard… (More)
The views and interpretations in this document are those of the authors and should not be attributed to the Inter-American Development Bank, or to any individual acting on its behalf. The Research Department (RES) produces a quarterly newsletter, IDEA (Ideas for Development in the Americas), as well as working papers and books on diverse economic issues. To… (More)
We analyze the short and long run effects of demographic ageing—increased longevity and reduced fertility—on per-capita growth. The OLG model captures direct effects, working through adjustments in the savings rate, labor supply, and capital deepening, and indirect effects, working through changes of taxes, government spending components and the retirement… (More)
This is a …rst step towards the optimal unemployment insurance design in general equilibrium model moral hazard. It considers is a self-…nanced policy in the context of a simpli…ed version of Lucas-Prescott (1974) with unobservable search e¤ort. In this context, existence of an optimal unemployment bene…t is shown. By de…nition, this unemployment insurance… (More)
This paper is the …rst attempt of applying the Easley Rustichini (Econometrica, 1999, 5) Replicator dynamics framework to simple one-period security markets, with a …nite set of actions for traders. In two and three action environments, the examples developed here show that even with very simple (objective) state spaces and straightforward Replicator… (More)
1 Breve resumen del paper 1.1 Descripción de principales supuestos.