Autor: Luis Araujo

WP050 – The Effect of Options on Coordination

ABSTRACT – This paper studies how constraints on the timing of actions affect equilibrium in intertemporal coordination problems. We show that while the possibility of waiting longer for others’ actions helps agents to coordinate in the good equilibrium, the option of delaying one’s actions harms coordination and can induce severe coordination failures: if agents are very patient, they might get arbitrarily low expected payoffs even in cases where coordination would yield arbitrarily large returns. The risk-dominant equilibrium of the corresponding one-shot game is selected when the option to delay effort is commensurate with the option to wait longer for others´ actions. In an application to innovation processes, we show that protection of the domestic industry might hinder industrialization. We also argue that increased competition might have spurred the emergence of shadow banking in the last few decades. Download do Paper Ano: 2013 Working-paper: 050 Luis Araujo Ler todos os Posts de Luis Araujo’s Share...

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WP029 – Informal Wages in an Economy with Active Labor Courts

ABSTRACT – In most developing countries, job regulations and the justice branch interfere on several aspects of labor contracts. Inspired by this fact, we build a model that explores the role of labor courts in the determination of the diference between formal and informal wages. We show that the presence of active labor courts in an environment where labor relations are subject to asymmetries of information reproduces features documented by the empirical literature. The main implications of our model are tested using Brazilian data. Download do Paper Ano: 2012 Working-paper: 029 Luis Araujo Ler todos os Posts de Luis Araujo’s Share...

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WP044 – Coordination in the Use of Money

ABSTRACT – Fundamental models of money, while explicit about the frictions that render money socially benefi…cial, are silent on how agents actually coordinate in its use. This paper studies this coordination problem, providing an endogenous map between the primitives of the environment and the beliefs on the acceptability of money. We show that an increase in the frequency of trade meetings, besides its direct impact on payoffs, facilitates coordination. In particular, for a large enough frequency of trade meetings, agents always coordinate in the use of money. We highlight the underlying properties of money (medium of exchange, record-keeping) that facilitate coordination. Download do Paper Ano: 2012 Working-paper: 044 Luis Araujo Ler todos os Posts de Luis Araujo’s Share...

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