I study price setting within a network of interconnected monopolists. Some firms possess stronger commitment or bargaining power than others, enabling them to influence the pricing decisions of other firms. While it is well-understood that multiple marginalization reduces both total profits and social welfare, I show that strategic interactions within the network exacerbate the marginalization problem. Individual profits are proportional to a new measure of network centrality, defined by the equilibrium characterization. The results underscore the importance of network structure in policy considerations, such as mergers or trade policies.

Rich behavioral biases, mistakes and limits on rational decision-making are often thought to make equilibrium analysis much more intractable. We establish that this is not the case in the context of one-sector growth models such as Ramsey-Cass-Koopmans or Bewley-Aiyagari models. We break down the response of the economy to a change in the environment or policy into two parts: the direct response at the given (pre-tax) prices, and the equilibrium response which plays out as prices change. Our main result demonstrates that under weak regularity conditions, regardless of the details of behavioral preferences, mistakes and constraints on decision-making, the long-run equilibrium will involve a greater capital-labor ratio if and only if the direct response (from the corresponding consumption-saving model) involves an increase in aggregate savings. One implication of this result is that, from a qualitative point of view, behavioral biases matter for long-run equilibrium if and only if they change the direction of the direct response. We provide detailed illustrations of how this result can be applied and generates new insights using models of misperceptions, self-control and temptation, and naive and sophisticated quasi-hyperbolic discounting.

We develop a dynamic computational network model of the banking system where fire sales provide the amplification mechanism of financial shocks. Each period a finite number of banks offers a large, but finite, number of loans to households. Banks with excess liquidity also offer loans to other banks with insufficient liquidity. Thus, each period an interbank loan market is endogenously formed. Bank assets are hit by idiosyncratic shocks drawn from a thin tailed distribution. The uneven distribution of shocks across banks implies that each period there are banks that become insolvent. If insolvent banks happen also to be heavily indebted to other banks, their liquidation can trigger other bank failures. We find that the distribution across time of the growth rate of banking assets has a ‘fat left tail’ that corresponds to rare economic disasters. We also find that the distribution of initial shocks is not a perfect predictor of economic activity; that is some of the uncertainty is endogenous and related to the structure of the interbank network.

Public adherence with health recommendations is vital for effective crisis response. During the COVID-19 pandemic, governments faced considerable challenges in persuading the public to adopt new recommendations. Using large-scale survey experiments across 12 Latin American countries, we investigate how respondents' agreement with health recommendations is affected by their attribution to experts from different sectors. Our results uncover a robust backlash against experts for pandemic-specific recommendations, but not for more general health advice. The backlash does not depend on the type of expert (academic, public or private sector). Our experimental setup allows us to concurrently assess the significance of different factors behind these results. Anti-intellectualism plays a role, since individuals with low initial trust in experts exhibit more negative reactions to expert attribution, although the backlash is also present for those with higher levels of trust, indicating that other factors likely play a role. We fail to find evidence that individual perceptions or personality traits such as social pressure, altruism or reactance contribute to the backlash. Beyond individual characteristics, we find that the backlash is stronger in countries that exhibited a more stringent government response to the pandemic. JEL Codes: I1, I3, H4

This article explores the complex interplay between deforestation policies and foreign influence, using a game theoretical model to analyze geopolitical factors influencing forest conservation decisions in countries with significant rainforests. The model highlights the conflicting interests of foreign powers – one aiming for economic benefits from agriculture and the other advocating for forest preservation to protect environmental services. The paper demonstrates how domestic political dynamics and economic shocks from the international economic influence regulatory decisions on deforestation in the shadow of foreign influence. This understanding is crucial for formulating strategies that balance developmental needs and global environmental concerns.