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The Lagos-Wright model—a monetary model in which pairwise meetings alternate in time with a centralized meeting—has been extensively analyzed, but always using particular trading protocols. Here, trading protocols are replaced by two alternative notions of implementability: one that allows only individual defections and one that also allows cooperative(More)
This paper adopts mechanism design to investigate the coexistence of …at money and higherreturn assets. We consider an economy with pairwise meetings where …at money and riskfree 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 study a market-game mechanism in a setting with potential information aggregation. The mechanism has two stages and is inspired by pari-mutuel betting. The second stage resembles the determination of final odds and payoffs, while the first stage is a version of the announced running bet totals and odds. In a model that is essentially a finite-state,(More)
Bank of Canada working papers are theoretical or empirical works-in-progress on subjects in economics and finance. The views expressed in this paper are those of the authors. No responsibility for them should be attributed to the Bank of Canada. ii Acknowledgements We thank many friends and colleagues, especially Abstract This paper studies the welfare(More)
A decision maker needs predictions about the realization of a repeated experiment in each period. An expert provides a theory that, conditional on each finite history of outcomes, supplies a probabilistic prediction about the next outcome. However, there may be false experts without any knowledge of the data-generating process who deliver theories(More)
We propose a theory of mixed strategies in zero-sum two-person games. Given a finite zero-sum two-person game g, we extend it to collective games g∞ and g∞,S, which are infinite repetitions of the game g. Players in the collective games are restricted to use computable strategies only, but each has a complex sequence that can be used in the computation. We(More)
This paper studies the choice of payment instruments in a simple model where both money and credit can be used as means of payment. We endogenize the acceptability of credit by allowing retailers to invest in a costly record-keeping technology. Our framework captures the two-sided market interaction between consumers and retailers, leading to strategic(More)
We study a mechanism that resembles a market. There are two main approaches to doing that. One uses a double-auction type of mechanism; the other, which is studied here, uses a Cournot quantity type of mechanism. Our mechanism has two stages and is inspired by pari-mutuel betting. The second stage resembles the determination of final odds and payoffs in(More)