Ariel Pakes (Harvard) will present:

"Just Starting Out: Learning and Equilibrium in a New Market"

at 12pm on Thursday, October 15, 2015 in 310 Silsby

Lunch will be provided

***THERE IS STILL ONE AVAILABLE SLOT FROM 3-3:30PM***
If you are available and would like to sign up for the last slot or dinner please see link below:

https://docs.google.com/spreadsheets/d/1iaSb6PcckpIBrfaNV8MkQ0frcee7datYggaa6imYABs/edit?usp=sharing

Abstract

We document the evolution of the newly created market for frequency response within the UK electricity system. A rm entering this market faces considerable uncertainties related to market demand and rivals' behavior. We show that the market converges over time to a rest point that is consistent with a notion of equilibrium. We draw on learning models from the existing literature to further analyze how this convergence occurs. We show that relatively simple models that combine learning about rivals' behavior with learning about demand t parts of the data well and indeed outperform equilibrium analysis.