Working Papers

Lake Peekskill, New York

Dynamic Level-k Think in the El Farol Bar Problem (with Colin Deurlington)

The El Farol Bar problem is a classic N-person coordination game. Patrons choose independently whether to go a venue, but if too many arrive, then each wishes she had stayed home. We apply a dynamic version of level-k thinking to this problem by assuming that anyagent may randomly begin to think one level deeper. The short-run properties of the system depend upon the speed at which agents become more sophisticated. In the long run, attendance at the Bar is described by a binomial random variable with mean N/2, independent of the agents’ preference parameters.

JEL C72 (nocooperative games), C73 (stochastic and dynamic games) D83 (learning; information and knowledge; belief)

deur_fish_learningAug2025.pdf

The Evolution of Comparative Advantage (with Fernando Vega-Redondo)

We study the evolution of comparative advantage in a model with two countries and n ≥ 2 goods. We show that the stochastically stable set consists of the pattern of production that follows the chain of comparative advantage in a sufficiently large world economy. Also, the chain of comparative advantage has an elegant structure that allows for step-by-step evolution. So convergence towards the equilibrium where each good is produced in the ”right” country is fairly rapid.

JEL B52 (evolutionary economics), D50 (general equilibrium), F10 (international trade)

Testing the Heckscher-Ohlin-Vanek Paradigm in a World with Cheap Foreign Labor (with Kathryn Marshall)

Measuring factor services, not physical quantities, we examine the technologies and endowments of thirty-nine countries in 2005. Each country has five factors of production. We conduct three tests of the Heckscher-Ohlin-Vanek paradigm: (1) the conventional one; (2) a benchmark where every country has America's technology; and (3) another that converts all endowments into international efficiency units. The first predicts the direction of trade better than any former study. The second shows no statistically significant evidence of missing trade. The third performs just as well, and it accounts for international differences in both factor prices and unit input requirements.

Heckscher-Ohlin-Vanek Theory, factor services, international productivity comparisons

Testing the HOV _World Economics.pdf

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