Price formation in single call markets

Article Abstract:

A model used to study the pricing formation process in a single call market (SCM), or two-sided sealed auction market featured a random values environment. The experimental model, which assigned value and cost parameters for buyers (bids) and sellers (asks), identified some strengths and weaknesses of the Bayesian-Nash Equilibrium (BNE) model in explaining the the price formation process in SCMs. Results showed that BNE predictions were most accurate when inexperienced traders faced robots that used the BNE bid and ask functions. The study also showed that robot opponents will be a useful tool to address SCM's price formation process in the future.

Pricing Policy, Pricing, Prices

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How social security and medicare affect retirement behavior in a world of incomplete markets

Article Abstract:

A dynamic programming (DP) model examined the effects of the U.S. Social Security and Medicare system to the retirement behavior of male employees between the ages 62 and 65, who have the Social Security as their only pension in the context of incomplete loan, annuity and insurance markets. Social Security is found to be accountable for the high rates in retirement at ages 62 and 65. A substantial risk aversion and a significant Pareto distribution of health care cost suggest that the employees are motivated to stay in their job until they are qualified for Medicare coverage at age 65.

Retirement Benefits, Management, Usage, Compensation and benefits, Retirees, Social security, Medicare, Dynamic programming, Retirement age

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Expectations formation and stability of large socioeconomic systems

Article Abstract:

Adaptive learning may or may not result in convergence and stability to self-fulfilling expectations in socioeconomic systems where no agent can control macroeconomic outcomes. The learning dynamics become disparate and conflicting when agents are uncertain about the local stability of the system. When agents are sure of the stability of the system and conjecture only convergent regularities, local stability results. The "uncertainty principle" emerges in a motley of learning dynamics and processes such as Bayesian learning, least squares learning and error learning.

Models, Economics, Learning, Least squares

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