Tai-Wei Hu

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This paper adopts mechanism design to investigate the coexistence of …at money and higher-return assets. We consider an economy with pairwise meetings where …at money and risk-free capital compete as means of payment, as in Lagos and Rocheteau (2008). The trading mechanism in pairwise meetings is chosen among all individually rational, renegotiation-proof(More)
We characterize the set of dynamic equilibria of a pure credit economy with random matching and limited commitment. For standard trading mechanisms there are a continuum of steady states, a continuum of credit cycle equilibria of any periodicity, a subset of which yield a higher welfare than the ones singled out in the literature, and a continuum of sunspot(More)
We propose a logical system in which a notion of the structure of a game is formally defined and the meaning of sequential rationality is formulated. We provide a set of decision criteria which, given sufficiently high order of mutual belief of the game structure and of every player following these criteria, entails Backward Induction decisions in generic(More)
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