Bachelor of Arts (Mathematics) University Missouri, 1965. Doctor of Philosophy (Mathematics) University California Berkeley, 1969.
Assistant Professor Economics and Mathematics, Visiting Association Professor, University Rochester, Rochester, New York, 1969-1971, 1973. Association Professor of Economics, University Chicago,
1972-1975. Association Professor, Professor of Economics, Cornell University, 1974-1977.
F. P. Ramsey Professor of Economics, University Wisconsin-Madison, Wisconsin, since 1975. Association Editor, Journal of Economic Theory, IER, since 1972. Advisory Editor, Advanced Textbook in Economics Series (North-Holland Publishing Company, Amersterdam, The Netherlands, 1983).
Became fascinated with economic science while writing econometric software in the
early 1960s. Contributed to the existence theory of optima and stability theory of multisector optimal growth models in the cases of certainty and uncertainty. Showed how, by suitable interpretation, these normative models can be turned into positive models of business cycles and asset price fluctuations.
This led to later work by others that showed it is harder to reject these models with aggregate time series data than was suspected. Was the first to formally examine in rational expectations models the logical possibility of hyperinflationary price-level bubbles and speculative bubbles where the asset’s price diverges from its market fundamental in markets for assets including fiat money. Discovered that bootstrap equilibria and bubbles could exist even in contexts where fiat money was intrinsically useful.
This work led to development by others of the first econometric tests for bubbles. Developed an asset pricing model that showed how real discount rates on future asset earnings increase as perceptions of future consumption deteriorate and why asset returns covary. This work has led to work by others that clarified (resolved?) the controversy over whether asset prices fluctuate too much to be consistent with market efficiency. Developed an alternative notion of sustainability against entry of natural monopoly that is appropriate for technologies requiring large sunk costs.
It is much easier than the impression given by the received sustainability literature for a true natural monopoly to drive out entrants in such situations. Showed that, contrary to received thoughts, the relative strength of incentives for a regulated dominant firm over an unregulated dominant firm to indulge in predatory cross subsidisation depends upon the dominant firm’s expectations concerning the time profile in regulatory tightness that it faces.