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Expectations over durable assets: How to avoid the formation of value bubbles

Journal of Economics Library

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Field Value
 
Title Expectations over durable assets: How to avoid the formation of value bubbles
 
Creator ROSAS MARTINEZ, Victor H.; Universita di Siena
 
Subject Non-bayesian expectations; Price bubbles; Profit maximization; Competition; Corruption; Mechanism design.
G12; G13; G18; G28; K42.
 
Description Abstract. There is a finite set of characteristics which can be present in a durable asset adding value to it, and that are not necessarily part of it in the moment of its acquisition. We represent formally how the expectations over the possible future characteristics of these goods influence its price, and get the conditions for the formation of bubbles, which allows us to propose mechanisms to avoid this kind of instinctive collective regimes. Posteriorly we extend our analysis to consider the case of monopoly and of an m-firms oligopoly producing these kinds of goods, finding that the cardinality of the firm(s)' possible plans of production to maximize benefits is the same. We show relation between the assets' prices and the cardinalities of the sets of suppliers, assets' varieties and entry consumers, with an indirect dependence on the rent labor wages. We model boundedly an analysis of the effect of tendencies like corruption on newly informed and non-Bayesian probabilities that constitute the prices. Finally, some extra provided mechanisms to avoid bubbles focus in reverting badly programed rule of thumbs, to get back to the right great rules respect.Keywords. Non-bayesian expectations, Price bubbles, Profit maximization, Competition, Corruption, Mechanism design.JEL. G12, G13, G18, G28, K42.
 
Publisher Journal of Economics Library
 
Contributor —
 
Date 2018-09-18
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.kspjournals.org/index.php/JEL/article/view/1746
10.1453/jel.v5i3.1746
 
Source Journal of Economics Library; Vol 5, No 3 (2018): September; 200-210
2149-2379
 
Language eng
 
Relation http://www.kspjournals.org/index.php/JEL/article/view/1746/1717
 
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