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| Gouel, Christophe. |
| This paper compares numerical methods for solving the competitive storage model. Since storage implies an inequality constraint, the solution methods must be considered carefully. The model is solved using value function iteration, and several projection approaches, including parameterised expectations and decision rules approximation. Using a penalty function approach to smooth the inequality constraint, perturbation methods are also applied. Parameterised expectations proves the most accurate method, while perturbation techniques are shown inadequate for solving this highly nonlinear model. The endogenous grid method allows rapid solution if supply is assumed to be inelastic. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Binding constraint; Nonlinear rational expectations models; Numerical methods; Agricultural and Food Policy; C63; D84; E37. |
| Ano: 2010 |
URL: http://purl.umn.edu/115430 |
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| Valsecchi, Irene. |
| Two agents are engaged in a joint activity that yields a common perperiod payoff at two rounds of play. The expert announces the probability that the current state of the world is low, instead of high, at each stage. Having received the report of the expert, the decision-maker takes action at every period according to his posterior beliefs. At the end of each round of play, the true current state is verifiable. The distinctive assumption of the paper is that the decision-maker makes a subjective appraisal of the expert’s reliability: he considers the expert’s true forecasts as the outcomes of an experiment of unknown statistical bias. The paper shows that the expert will have instrumental reputational concerns, related to the future estimate of the... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Opinion; Expert; Strategic Communication; Financial Economics; D81; D84. |
| Ano: 2010 |
URL: http://purl.umn.edu/98437 |
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