We re-visit three classical models in information economics. The first chapter studies the screening problem for a seller who owns a single good, and a buyer whose valuation for the good is their private information. We allow for the seller to acquire information at some cost about the buyer's value, in addition to her choice over the probability of trade and the transfer. The seller thus chooses a Blackwell experiment for each announcement that the buyer makes in a direct revelation mechanism. More informative experiments are more costly. Under mild conditions, there are always optimal mechanisms where the seller acquires coarse information about the buyer. In particular, it is always optimal for the seller to choose an experiment that consists of no more than four signals. When the buyer has only two possible values, the same holds for experiments that consist of at most three signals. The second chapter examines information disclosure in a setting of strategic experimentation. A group of agents continuously and independently choose between a safe arm and risky arms of the same type. When the arms reveal good news, we are able to achieve efficiency in a class of simple information disclosure mechanisms when the agents are initially optimistic enough about their risky arms, but only when there are not too many agents. When the reverse is true, the mechanism must be transparent. Thus, there is a tradeoff between transparency and efficiency. This tradeoff does not exist in the case of bad news. In the final chapter, we borrow insights from social learning theory to understand why institutions have persistent effects. We adapt the classical model in a minimal fashion to accommodate a role for institutions, and demonstrate that social learning is one plausible mechanism of persistence.

This thesis consists of three papers in the broad field of Applied Economics. I focus on three "soft factors", namely, face-to-face communication, brief social interactions and information updates. I study on how they affect individual and organisational outcomes using different natural experiments. The first chapter provides causal evidence on how the ability to communicate face-to-face (in addition to electronic communication) can increase organisational performance. The study exploits a natural experiment within a large organisation where workers must communicate electronically with their teammates. A computerized system allocates the tasks to workers creating exogenous variation in the co-location of teammates. Workers who share the same room, can also communicate in person. The main findings are that face-to-face communication increases productivity and that this effect significantly varies across tasks, team characteristics and working environments. In the second chapter I construct a novel dataset of immigrants and ships arrived to the US in the early 20th century to study the effects of brief social interactions and their persistence over time. The chapter shows that individuals travelling (during few days) with shipmates that have better connections in the US, have higher quality jobs. Several findings are consistent with the mechanism whereby individuals get information or access to job opportunities from their shipmates. The study highlights the importance of social interactions with unknown individuals during critical life junctures. It also suggests that they are more relevant for individuals with poor access to information or weak social networks. The third chapter shows that executions cause a local and temporary reduction in serious violent crime. The interpretation of this result follows from a theoretical framework connecting information updates with the increasing 'awareness' of individuals about the consequences of crime. Consistently with the predictions of the model, the study finds that effects are stronger when media attention is high and lower in places with high propensity to apply the death penalty.

This thesis examines the contributions of three major figures in heterodox economic thought - Thorstein Veblen, Joan Robinson and Michał Kalecki - to the identification of what Else Oyen describes as ‘poverty producing processes’. It is argued that to date no distinct heterodox theory of the causes and consequences of poverty exists. This is surprising, not least because questions of social power, asymmetrical access to resources, and inequality are among the core themes in heterodox thought. This thesis demonstrates that Robinson, Kalecki and Veblen have devoted considerable time and effort to the investigation of poverty-related issues. Combined, they have discussed four key processes that contribute to poverty production: conspicuous consumption, mark-up pricing, industrial sabotage and hegemonic policy-making. This thesis suggests that these four core processes amount to a distinct heterodox perspective on poverty production, and may serve as a basis for a comprehensive enquiry into the causes of poverty in advanced capitalism. Being in essence a history of economic thought analysis of post-Keynesian and institutionalist theorising on poverty, this thesis contributes to economic poverty research, the history of economic thought and the development of an integrated heterodox approach.

We apply regime-switching models to study the dynamic switching behaviour of equity risk premia. Traditionally, equity risk premia have been estimated assuming a single regime exists. Regime-switching models allow for the existence of two, or more, regimes. Three regime-switching models are employed: structural break models, threshold models and Markov regime-switching models. Both structural break models and threshold models assume that the switching mechanism is deterministic. The former allow for only a single break and the state variable is solely determined by time. Under the latter, multiple changes are allowed and the state variable is determined by an observable variable with respect to an unobserved threshold. In Markov regime-switching models, equity risk premia are allowed to switch probabilistically for each observation. This is achieved by introducing a state variable which is governed by a Markov process. To capture the co-movements among financial variables, we extend regime-switching models to a VAR framework, employing threshold autoregressive vector models and Markov regime-switching vector models. We estimate models of UK equity risk premia conditionally on the state variable which is related to business conditions. The results of non-linearity tests favour regime-switching models and suggest that regime-switching is an important characteristic of UK equity risk premia.

Asset prices offer useful information for monetary policymakers in the short-term, yet their significant relationship to primary policy-indicators is debated. In one view bubbles are difficult to recognise and central banks should act just against the adverse consequences of their unwinding. The opposite view advocates ‘pre-emptive’ monetary policy as financial imbalances accumulate aiming to forestall such consequences. After reviewing the debate, we evaluate ‘pre-emptive’ monetary policy when financial stability is an explicit objective replacing the output-gap. Modelling a game between a central bank and the financial sector similar to Barro and Gordon (1983), we examine monetary policy under commitment and discretion. In contrast to the relevant literature, we conclude that pre-emptive monetary policy succeeds in better controlling inflation, anchoring inflation expectations and imposing more discipline to the financial sector when committed to a rule. The model is extended to incorporate incomplete information about the policy objectives. We evaluate the effect of vagueness about the central bank’s preferences for financial stability in the behaviour of the central bank and the financial sector, and how reputation-building affects the conduct of discretionary policy. Finally, we discuss the relevance of our conclusions in the light of the global financial crisis initiated in August 2007.

As a result of strong economic growth and an expanding population over the course of the last two decades, China has become one of the world's leading economies and the world's largest energy consumer. Given the importance of China to the world economy, and the essential role that energy plays, it is crucial to understand the energy-related economic challenges faced by China. This thesis investigates four related topics on the economics of energy in China. Topics include (1) the relationship between urbanization and energy efficiency, (2) the cost effect of energy on industrial structure, (3) gasoline price patterns, and (4) the impact of energy abundance on industrial production and trade distribution. The results emphasize the importance of urbanization and open-market policies in determining the energy usage in China, and suggest that energy prices and energy-related regulations are efficient instruments to promote resources reallocation across industries and resources relocation across regions.

This thesis consists of three interrelated chapters on adaptive learning. In each chapter, I investigate the way in which adaptive decision makers/players behave in the long run. In particular, I consider subjective assessment maximizers; each player assigns a subjective assessment to each of his actions based on its past performance and chooses the action which has the highest assessment. They update their assessments adaptively using realized payoffs. I mainly focus on the following three cases; (1) an adaptive decision maker takes into account not only direct payoff information, but also foregone payoff information; (2) adaptive players face a normal form game with strict Nash equilibrium in each of infinitely many periods; and (3) adaptive players face a finitely repeated game in each of infinitely iterated periods. Then I show the conditions under which (1) adaptive decision maker chooses the optimal action, (2) adaptive players end up choosing Nash equilibrium strategies, and (3) adaptive players’ behavioural strategies converge to an agent quantal response equilibrium, which is a quantal response equilibrium for extensive form games.

We consider the concept of coarse correlated equilibrium (CCE) in various contexts; games with quadratic payoff functions (which include Cournot duopoly, public good provision and emission abatement) and a linear duopoly game. For the games with quadratic payoffs we compute the largest feasible total utility in any CCE and show that it is achieved by a CCE involving only two strategy profiles. The improvement over and above the Nash equilibrium payoff is substantial in the various economic examples considered for this class of games. In case of the linear duopoly game, we prove that Nash-centric devices, involving a sunspot structure, are simple symmetric CCE, and any unilateral perturbation from such a structure fails to be an equilibrium.

Theoretical models of the exchange rate are developed where information on the model is not fully available to agents. It is an application of Benjamin Friedman's (1979) theme that full rational expectations may be a possibility only in the long-run, even for completely rational individuals. The thesis attempts to develop the theory of exchange rate behaviour by considering some neglected informational issues. The three substantive chapters each consider specific aspects of relevance to the determination of the exchange rate from an asset market view of perfect capital mobility. These are the possible current account inter-relationship, the persistence of interest rate differentials between the two currencies and the subjectivity of and the regress in beliefs across a decentralised market. Generally, limited information on the model will give rise to erroneous beliefs, on the one hand, and encourage the acquistion of information and the revision of beliefs, on the other. Erroneous beliefs will cause correlations between variables, which may not normally occur inside full rational expectations. The revision of beliefs will bring a particular source of non-stationarity to the data. And the stability of certain learning forms may require limitations on the degree of capital mobility. These conclusions would suggest that any empirical work on modelling the exchange rate may gain from relaxing certain a priori restrictions, which properly belong to models with stronger assumptions on the availability of information.

The thesis contains 5 independent papers together with an introduction and a general conclusion. All five papers consider private information in simple oligopoly models with linear demand and cost functions. The problem to be analysed is the extend to which private information is transmitted between firms and the consequences thereof. In principle the transmission (or dissemination) can take place voluntarily or involuntarily. In the case of voluntary information transmission (or sharing) we assume that this is done honestly. One of the main results in this strand of the literature is that firms have no incentives to share information unless they can collude over strategies. In chapter II and III we show that this conclusion is not generally true. In chapter II we consider the incentive for risk-averse firms to share their private information. We show that the assumption of risk-aversion in some cases reverse the conclusion in the literature. In chapter III we show that there are cases in which private information and the sharing thereof within a collusive arrangement prove detrimental to the size of a stable collusive arrangement. Thus in some cases private information imply a disincentive to collude. Chapter IV and V looks at the effect of uncertainty and private information on a two-stage duopoly model in which firms first choose capacity, then compete over prices. In chapter IV we show that no pure strategy equilibrium exists regardless of whether uncertainty is resolved before or after capacity is chosen. A mixed strategy equilibrium is shown to exist, and the equilibrium is worked out for a specific distribution of the random variable. In chapter V we modify the equilibrium concept by imposing a no-mill-price-undercutting rule. We shown that if firms' capacities differ, the firm with the highest capacity endogeneously sets the higher price. Examples of private-asymmetric information are considered and the main finding from the examples are that there are cases where neither firm wants to share the information of the best informed. Chapter VI which is joint work with Norman J. Ireland considers involuntary information transmission via output plans. This allows us to rationalise positive consistent conjectures in a simple oligopoly model. General for all the models considered is that the results not only differ from those found under certainty, but also that the results are possibly non-robust, especially with regards to changes in information structures and functional forms.