# Northwestern University, Center for Mathematical Studies in Economics and Management Science

# Discussion Papers

Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014

Phone: 847/491-3527

Fax: 847/491-2530

Web page: http://www.kellogg.northwestern.edu/research/math/

Email:

More information through EDIRC

Phone: 847/491-3527

Fax: 847/491-2530

Web page: http://www.kellogg.northwestern.edu/research/math/

Email:

More information through EDIRC

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**To be notified about new items in this series:**fwalker@kellogg.northwestern.edu (see also NEP)

**For corrections or technical questions regarding this series, please contact (Fran Walker)**

**Series handle:**repec:nwu:cmsems

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### 1983

**574 The Efficiency of Monopolistically Competitive Equilibria in Large Economies: Commodity Differentiation With Pure Substitutes***by*Larry E. Jones**573 An Axiomatization of Harsanyi's Non-Transferable Utility Solution***by*Sergiu Hart**571 The Slow Server Problem***by*Michael Rubinovitch**570 Bid, Ask and Transaction Prices in a Specialist Market with Heterogeneously Informed Traders***by*Lawrence R. Glosten & Paul R. Milgrom**569 The Pure Theory of Large Two Candidate Elections***by*John Ledyard**568 Strategy-Proofness: The Existence of Dominant Strategy Mechanisms***by*Eitan Muller & Mark Satterthwaite**567 Monotonic Solutions to General Cooperative Games***by*Ehud Kalai & Dov Samet**566 Capital Accumulation and the Sustainability of Collusive Markets***by*Chaim Fershtman & Eitan Muller**565 A Martingale Characterization of the Price of a Nonrenewable Resource with Decisions Involving Uncertainty***by*Sudhakar D. Deshmukh & Stanley R. Pliskaf**564 Production Economies With Patents: A Game Theoretic Approach***by*Amoz Kats & Yair Tauman**563 Supportability, Sustainability and Subsidy Free Prices***by*Leonard J. Mirman**562 Monopoly and Sustainable Prices as a Nash Equilibrium in Contestable Markets***by*Leonard J. Mirman**561 Ramsey Prices, Average Cost Prices and Price Sustainability***by*Leonard J. Mirman & Yair Tauman & Israel Zang**560 On the Implementability of Reduced Form Auctions***by*Steven A. Matthews**559 Short-Run Analysis of Fiscal Policy in a Simple Perfect Foresight Model***by*Kenneth L. Judd**558 Exercises in Voodoo Economics***by*Kenneth L. Judd**557 Continuous and Hypograph Convergence of Utilities***by*Kerry Back**556 Solutions to the Bargaining Problem***by*Ehud Kalai**555 Prices and Qualities in Markets With Imperfect Information: A Search Model***by*Yuk-Shee Chan & Hayne Leland**554 Linear Rational Expectations Interrelated Factor Demands and Symmetric Adjustment Costs***by*Tryphon E. Kollintzas**553 Capital Accumulation Games of Infinite Duration***by*Chaim Fershtman & Eitan Muller**552 Distributed Lags and Intermediate Good Imports***by*Tryphon E. Kollintzas & Steven L Husted**551 The Number of Traders Required to Make a Market Competitive: The Beginnings of a Theory***by*Thomas A. Gresik & Mark A. Satterthwaite**550 On the Existence of a Locally Stable Dynamic Process With a Statically Minimal Message Space***by*Kenneth R. Mount & Stanley Reiter**549 A Welfare Analysis of Unemployment Insurance: Variations on Second Best Themes***by*Dale T. Mortensen**548 Bayesian Equilibrium and Incentive-Compatibility: An Introduction***by*Roger B. Myerson**547 Unions and Strikes with Asymmetric Information***by*Beth Hayes**546 Unanimity Games and Pareto Optimality***by*Ehud Kalai & Dov Samet**461R A Theory of Price Formation and Exchange in Oral Auctions***by*David Easley & John 0. Ledyard

### 1982

**626 Sustainable Outlay Schedules***by*J.C. Panzar & AW. Postlewaite**580 Optimal Regulatory Pricing Under Asymmetric Cost Information***by*Wayne Y. Lee & Anjan V. Thakor**572 Redistributive Taxation in a Simple Perfect Foresight Model***by*Kenneth L. Judd**545 Using Weighted Nonlinear Least Squares to Estimate Fish Population Dynamics Models***by*Ian Domowitz**544 Monopolistic Competition***by*K. Ravi Kumar & Mark A. Satterthwaite**543 The Linear Model With Stochastic Regressors and Heteroscedastic Dependent Errors***by*Ian Domowitz**542 An Elasticity Can Be Estimated Consistently Without a Priori Knowledge of Functional Form***by*Ibrahim El Badawi**541 A Note on Competitive Foresight and Optimum Product Diversity***by*Larry E. Jones**540S Qualitative Choice and the Blending of Discrete Alternatives***by*Alex Anas & Leon N. Moses**539 Amtrack Vs. Conrail: Ramsey as Arbiter***by*Ronald R. Braeutigam & Leon N. Moses**538 Imposing Curvature Restrictions on Flexible Functional Forms***by*A. Ronald Gallant & Gene H. Golub**537 Managerial Incentives, Investment and Aggregate Implications, Part I: Scale Effects***by*Bengt Holmstrom & Laurence Weiss**536 The Allais Paradox, Dutch Auctions, and Alpha-Utility Theory***by*Robert J. Weber**535 Structures for the Non-Hierarchical Organizations***by*Barry O'Neill**534 The Simplest Three-Person Non-Cooperative Games***by*Barry O'Neill**533 A Non-Metric Test of the Minimax Theory***by*Barry O'Neill**532 Optimal Fiscal and Monetary Policy in an Economy Without Capital***by*Robert E. Lucas Jr. & Nancy L. Stokey**531 On the Optimality of the Demand Revealing Mechanism in Large Economies***by*Ramon Marimon**530 Duality Theory for Some Stochastic Control Models***by*Stanley R. Pliska**529S Investment and the Valuation of Firms When There is an Option to Shut Down***by*Robert McDonald & Daniel R. Siegel**528 Cooperative Games with Incomplete Information***by*Roger B. Myerson**527 Two-Person Bargaining Problems with Incomplete Infonnation***by*Roger B. Myerson**526 A Competitive Model of Commodity Differentiation***by*Larry E. Jones**525 Duopoly, Conjectural Variations and Supergames***by*Ehud Kalai & William Stanford**524 Estimating the Time Spent on Shopping Activities***by*Jacob Hornik**523 Cores and Values of Monopolistic Market Games: Asymptotic Results***by*Amoz Kats & Yair Tauman**522S Incentives in Government Contracts***by*Stefan Reichelstein**521 Comparison of Bargaining Solutions, Utilitarianism, and the Minimax Rule by their Effectiveness***by*Barry O'Neill**520 The Inductive Solution for Non-Cooperative Games***by*Barry O'Neill**519 Measures for the Psychological Risk of an Accident***by*Barry O'Neill**518 Optimal Growth with Many Consumers***by*Robert E. Lucas Jr. & Nancy L. Stokey**517 A Stochastic Calculus Model of Continuous Trading: Return Processes and Investment Plans***by*Stanley R. Pliska**516 The Effect of Liquidity Constraints on Consumption: Cross-Sectional Analysis***by*Fumio Hayashi**515 Persistent Equilibria in Strategic Games***by*Ehud Kalai & Dov Samet**513 The Implicit Contract Model and Labor Markets: A Critique***by*Aba Schwartz

### 1981

**514 Job Matching***by*Milton Harris & Yoram Weiss**512 Option Pricing When the Underlying Asset is Non-Stored***by*Robert McDonald & Daniel Siegel**511 Expectations, Plans and Realizations: In Theory and Practice***by*Marc Nerlove**510 Vector Measures are Open Maps***by*Dov Samet**509 Deterrence and Delinquency: An Analysis of Individual Data***by*Claude Montmarquette & Marc Nerlove**508R The Period of Commitment in Dynamic Games***by*Jennifer F. Reinganum & Nancy L. Stokey**507 On the Informational Requirements for the Implementation of Social Choice Rules***by*Stefan Reichelstein**506 Stochastic Technology, Production Plans, and the Theory of the Firm***by*Andrew Daughety & Lawrence Glosten**505 The Ultimate of Chaos Resulting from Weighted Voting Systems***by*Donald Saari**504 Asymptotic Bias of Ordinary Least Squares Estimator for Multivariate Autoregressive Models***by*Taku Yamamoto & Naoto Kunitomo**502 On A Third Order Optimum Property of The LIML Estimator When the Sample Size is Large***by*Naoto Kunitomo**501 A Third Order Optimum Property of the ML Estimator in Linear Functional Relationships and Simultaneous Equation Systems***by*Naoto Kunitomo**500 Optimal Consumption of A Nonrenewable Resource with Stochastic Discoveries and a Random Environment***by*Sudhakar D. Deshmukh & Stanley R. Pliska**499 Natural Energy Resource Decisions and Prices Involving Incertainty***by*Sudhakar D. Deshmukh & Stanley R. Pliska**498 Measurement Error Theories for Von Neumann-Morgenstern Utility Functions***by*Jehoshua Eliashberg & J. Hauser**497 The Effect of Syndication on the Core of Markets with Transferable Utility and Continuum of Traders***by*Dov Samet**496 Multiple-Object Auctions***by*Robert J. Weber**495 Efficient and Durable Decision Rules with Incomplete Information***by*Bengt Holmstrom & Roger B. Myerson**494 Equilibrium Limit Pricing: The Effects of Private Information and Stochastic Demand***by*Steven A. Matthews & Leonard J. Mirman**493 Towards a Genuinely Polynomial Algorithm for Linear Programming***by*Nimrod Megiddo**492 The Relation Between Social Security, Saving, and Investment in a Life-Cycle Model***by*Truman Bewley**491 The Indeterminacy of Interest Rates***by*Truman Bewley**490 The Maximum Coverage Location Problem***by*Nimrod Megiddo**489 A Stochastic Calculus Model of Continuous Trading: Complete Markets***by*J. Michael Harrison & Stanley R. Pliska**488 A Theory of Wage Dynamics***by*Milton Harris & Bengt Holmstrom**487 Economic Policy in an Open Macro Model with Rational Labor Behavior***by*Pekka Ahtiala**486 Fiscal and Monetary Policies in an Open Economy with a Supply Side***by*Pekka Ahtiala**485 On the Core and Dual Set of Linear Programming Games***by*Dov Samet & Eitan Zemel**483 A Markov Model of Employment***by*Kenneth Burdett**482S The Economics of Mating***by*Dale T. Mortensen**481 Mechanism Design by an Informed Principal***by*Roger B. Myerson**480S Selling to Risk Averse Buyers with Unobservable Tastes***by*Steven A. Matthews**479 Contracts, Consensus, and Group Decisions***by*Ehud Kalai**478S Regulation of Groups of Firms***by*Andrew F. Daughety**476 The Determination of Marginal-Cost Prices Under a Set of Axioms***by*Dov Samet & Yair Tauman**475 On the Complexity of Point Covering and Line Covering***by*N. Meggido & A. Tamir**474 Peasants, Potatoes, and Poverty: Transactions Costs in Prefamine Ireland***by*Elizabeth Hoffman & Joel Mokyr**473 When does the J-Curve Have a J-Shape? A Reconsideration***by*Pekka Ahtiala**472S The Distribution of Family Income and Earnings Capacity Over the Life Cycle***by*Evelyn Lehrer & Marc Nerlove**471 Moral Hazard in Teams***by*Bengt Holmstrom**470 The Coase Theorem: Some Experimental Tests***by*Elizabeth Hoffman & Matthew Spitzer**469S Efficient Mechanisms for Bilateral Trading***by*Roger B. Myerson & Mark A. Satterthwaite**468 An Axiomatic Approach to the Allocation of a Fixed Cost Through Prices***by*Leonard J. Mirman**467 Values of Market with a Majority Rule***by*Yair Tauman**466S Conjectural Variations***by*Morton I. Kamien & Nancy L. Schwartz**465 Competitive Bidding and Proprietary Information***by*Richard Engelbrecht-Waggins**464 A Difficulty vith the 'Command' Allocation Mechanism***by*Richard E. Ericson**463 Topologies on Information and Strategies in Games with Incomplete Information***by*Paul Milgrom & Robert J. Weber**462 The Value of Information in a Sealed-Bid Auction***by*Paul Milgrom & Robert J. Weber**461 A Theory of Price Formation and Exchange in Oral Auctions***by*David Easley & John 0. Ledyard**457 Tobin's Marginal q and Average a : A Neoclassical Interpretation***by*Fumio Hayashi**454 Martingales and Stochastic Integrals in the Theory of Continous Trading***by*J. Michael Harrison & Stanley R. Pliska**452 An Empirical Investigation of the Returns to Job Search***by*Robert S. Chirinko**451 Post-War U.S. Business Cycles: An Empirical Investigation***by*Robert J. Hodrick & Edward Prescott**447R A Theory of Auctions and Competitive Bidding***by*Paul Milgrom & Robert J. Weber**428R Distributional Strategies for Games with Incomplete Information***by*Paul Milgrom & Robert Weber

### 1980

**477S The Pricing of Primary Care Physicians' Services: A Test of the Role of Consumer Information***by*Mark V. Pauly & Mark A. Satterthwaite**460 Equilibrium Contracts in a Monetary Economy***by*V.V. Chari**459 Involuntary Unemployment and Implicit Contracts***by*V.V. Chari**455 On Search Over Rationals***by*Eitan Zemel**453 Time to Build and the Persistence of Unemployment***by*Finn Kydland & Edward C. Prescott**450 Efficient Estimation of Time Series Models with Predetermined***by*Fumio Hayashi & Christopher Sims**449 Polynomial Algorithms for Estimating Network Reliability***by*Eitan Zemel**448 An Investigation of Competitive Preference Structures and Posterior Performance Through a Bayesian Decision-Theoretic Approach***by*Jehoshua Eliashberg**446 A Model of the Demand for Investment Banking Advisement and Distribution Services for New Issues***by*David P. Baron**445 A Problem of Rights Arbitration from the Talmud***by*Barry O'Neill**444 Estimation of Macroeconometric Models Under Rational Expectations: A Survey***by*Fumio Hayashi**443 A Sufficient Condition on f for f.u to be in pNAD***by*Leonard J. Mirman**442 Contractural Models of the Labor Market***by*Bengt Holmstrom**441 Conjectural Variations***by*Morton Kamien & Nancy L. Schwartz**440 Attainable Sets of Markets: An Overview***by*Robert J. Weber**439 Intertemporal Optimization and Demand Analysis***by*Fumio Hayashi**438 On The Theory of Delegation***by*Bengt Holmstrom**437 On the Formation of Price Expectations: An Analysis of Business Test Data by Log-Linear Probability Models***by*Heinz Konig & Marc Nerlove & Grilles Oudiz**436 Growth as a Public Good***by*Truman F. Bewley**435 A Generalized Hazard Rate***by*Morton I. Kamien & Nancy L. Schwartz**434 A Duopoly Model of the Adoption of an Innovation of Uncertainty Profitability***by*Richard A. Jensen**433 A General Theory of Cooperative Solutions for Games with Incomplete Information***by*Roger B. Myerson**432 Solutions for Two-Person Bargaining Problems with Incomplete Information***by*Roger B. Myerson**431 The Martingale Property of Asset Prices***by*Truman F. Bewley**430 Optimization of Unknown, Costly Objective Functions Subject to a Budget Constraint***by*Andrew Daughety & M.A. Turnquist**429 Optimal Coordination Mechanisms in Principal-Agent Problems***by*Roger B. Myerson**427 Predation, Reputation, and Entry Deterrence***by*Paul Milgrom & John Roberts**426 On The Non-Robustness of Barro's Neutrality Result on Social Security***by*Nancy L. Stokey**425 Generalized Network Problems Yielding Totally Balanced Games***by*Ehud Kalai & Eitan Zemel**424 A Preface on Modelling the Regulated U.S. Economy***by*Stanley Reiter & Jonathan Hughes**423 Inconsistencies of Weighted Summation Voting Systems***by*Donald G. Saari**422 Behavioral Explanations of Efficient Public Good Allocations***by*Ronald M. Harstad & Michael Marrese**421 Preplay Negotiations in Non-Cooperative Games***by*Ehud Kalai**420 Local Simple Games***by*Steven A. Matthews**419 Risk Sharing and Group Decision Making***by*Jehoshua Eliashberg & Robert L. Winkler**418 A Two-Person Game of Information Transmission***by*Jerry R. Green & Nancy L. Stokey**417 Factor Price Changes***by*David P. Baron & Raymond R. De Bondt**416 An Introduction to Information Structures***by*David A. Malueg**415 An Experimental Study of a Stochastic Model of Committee Voting with Exogenous Costs***by*Elizabeth Hoffman & Edward W. Packel**414R Equilibrium Long-Term Labor Contracts***by*Bengt Holmstrom**413 On Totally Balanced Games and Games of Flow***by*Ehud Kalai & Eitan Zemel**405 An Integration of Equilibrium Theory and Turnpike Theory***by*Truman F. Bewley**370 A Critique of Tiebout's Theory of Local Public Expenditures***by*Truman F. Bewley

### 1979

**503 Asymptotic Optimality of the Limited Information Maximum Likelihood Estimator in Large Econometric Models***by*Naoto Kunitomo**484 The Permanent Income Hypothesis: Estimation and Testing***by*Fumio Hayashi**458 Linear Stochastic Models with Decentralized Information***by*V.V. Chari**456 Design of Incentive Schemes and the New Soviet Incentive Model***by*Bengt Holmstrom**412 Regulating a Monopolist with Unknown Costs***by*David P. Baron & Roger B. Myerson**411 The Cost of Capital in Non-Marketed Firms***by*Bengt Holstrom**410 Adoption and Diffusion of an Innovation Under Uncertain Profitablilty***by*Richard Jensen**409 Job Differentiation and Wages***by*Nancy Stokey**408 Self-Fulfilling Expectations***by*Nancy Stokey**407R Good Nevs and Bad News: Representation Theorems and Applications***by*Paul R. Milgrom**404 The Term Structure of the Forward Premium***by*Craig S. Hakkio**403 An Econometric Analysis of the Fertility and Labor Supply of Unmarried Women***by*Evelyn Lehrer & Marc Nerlove**402 Bayesian Analysis of Competitive Decision-Making Situations***by*Jehoshua Eliashberg**401 Strategic Equilibria and Decisive Set Structures for Social Choice Mechanisms***by*Edward W. Packel & Donald G. Saari**400 Strong Form Informational Efficiency in Stock Markets with Disequilibrium Trading***by*Lawrence R. Glosten**399R Equilibrium Limit Pricing Doesn't Limit Entry***by*Paul Milgrom & John Roberts**398 Theoretical Implications of the Permanent Income Hypothesis***by*Truman Bewley**397 Locating Centers on a Tree with Discontinuous Supply and Demand Regions***by*Arie Tamir & Eitan Zemel**396 Technical Note to 'Strategy-Proof Allocation Mechanisms'***by*Mark A. Satterthwaite & Hugo Sonnenschein**395 Strategy-Proof Allocation Mechanisms***by*Mark A. Satterthwaite & Hugo Sonnenschein**394 The Dynamics of Supply: Retrospect and Prospect***by*Marc Nerlove**393R An Axiomatic Characterization of Common Knowledge***by*Paul Milgrom**392R An Algorithm for Computing Equilibria in a Linear Monetary Economy***by*Roger Myerson**391 A Data Base for Operations Research Models***by*E. Stohr & M. Tanniru**390 Inflation and Growth in the Long-Run: A Critical Note on Models Of Karni and Mundell***by*William D. Robinson**389 Maximum Likelihood Estimator for Choice-Based Samples***by*Stephen R. Cosslett**388 Competitive Market Allocation Mechanisms and Ex-Ante Optimality***by*Elizabeth Hoffman**386 A Theoretical Approach to the Decision to Stop Deliberating Over Legislative Alternatives***by*Elizabeth Hoffman & Edward W. Packel**385 The Investment Banking Contract for New Issues Under Asymmetric Information: Delegation and Incentive Problem***by*David Baron & Bengt Holmdstrom**384 The Matching Process as a Non-Cooperative/Bargaining Game***by*Dale T. Mortensen**383 The Optimum Quantity of Money***by*Truman Bewley**382 Female Labor Supply Behavior Over the Life Cycle: An Econometric Study***by*Eveleyn Lehrer & Marc Nerlove**381 A Dynamic Microeconomic Model with Durable Goods and Adaptive Expectations***by*Roger B. Myerson**380 Search, Layoffs, and Labor Market Equilibrium***by*Ken Burdett & Dale T. Mortensen**379 An O(n log2 n) Algorithm for the kth Longest Path in a Tree with Applications to Location Problems***by*N. Megiddo**378 Worker Heterogeneity, Hours Restrictions, and Temporary Layoffs***by*M. Loewenstein**377R Information, Trade, and Common Knowledge***by*Paul Milgrom & Nancy L.Stokey