Imperfect knowledge and behaviour in the foreign exchange market

Article Abstract:

The impact of imperfect knowledge for exchange rate dynamics is considered as an explanation of the difficulties in explaining movements in foreign exchange rates and is examined in a theories consistent expectation (TCE) framework or model. In a TCE framework, it is assumed that agents use only qualitative knowledge instead of quantitative knowledge on the economy. It is argued that exchanged rate expectations are based on fundamentals and are subject to recurring structural shifts. Perfect knowledge is difficult to acquire due to the unpredictability of the shifts. It is concluded that while exchange rates are based on fundamentals, their relationship cannot be known perfectly.

Models, Economic aspects, Rational expectations (Economics), Foreign exchange market

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Two-level ultimatum bargaining with incomplete information: an experimental study

Article Abstract:

The assumption of fairness in bargaining is illustrated by using a two-level ultimatum game. The game requires an acceptance of offer despite incomplete information on the part of the accepting player. The proposer, who has complete information on the full utility of the cake, offers an unfair share to the other player in the guise of fairness. The result supports a theory in distributive justice wherein players with better information take advantage of the fairness assumption to increase their bargaining benefits.

Distribution (Economics), Consumer behavior, Negotiation, Negotiations, Game theory

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The role of ancillarity in inference for non-stationary variables

Article Abstract:

The relationship between conditional inference and econometric regression problems and the function of cointegration in error correction analysis are examined. Non-stationary variables are then applied for both regression and cointegration models. Information indicated the level of conditional variance for the maximum likelihood estimator. Thus, inference must be derived from information's function as an ancillary quantity.

Regression analysis, Maximum likelihood estimates (Statistics), Maximum likelihood (Statistics)

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