We show that extrinsic or nonfundamental uncertainty influences markets in a controlled envrionment, This work provides the first direct evidence of sunspot equilibria. These equilibria require a common understanding of the semantics of the sunspor variable, and they appear to be sensititive to the flow of information. Sunspots always occur in a closed-book call market, but they happen only occasionally in a double acution, where inframarginal bids and offers are observable.


  This paper examines whether comparative advantage is the long-run outcome of an evolutionary process in the open economy. It formalizes the notion that natural selection eliminates inefficient firms and thus leads to stable and perhaps efficient patterns of world trade. Instead of assuming the existence of a Walrasian auctioneer, we study two simple matching processes that coordinate trade between firms. Our central result is that specialization according to comparative advantage, with the larger country possibly incompletely specialized, is the unique evolutionarily stable state of the world economy    

An agent-based model in which economic exchange and military conflict are emergent processes is used to explore the relationship between trade and war. The model of exchange is an applied analysis of the economics of trading networks. The model of conflict treats war as a breakdown in interstate bargaining due to incomplete information. The simulations explore howinitial economic geography, state revisionism, defensive advantage, and technological advancement akin to globalization affect both trade and war. The results show that the relationship between trade and war depends on third factors, and an inverse relationship between trade and war emerges from compact geographies with revisionist states.


This comment examines some conditions under which extrinsic or nonfundamental uncertainty might matter even when the underlying economy admits a unique equilibrium.



This note shows that there are monetary equilibria in the model of overlapping generations that are in the core. Some equilibria have positive stocks of outside money in every generation. These equilibria are thus self-enforcing, and introducing money into an economy need not be tantamount to contriving a new social institution designed to enforce sequential contracts.