We study the optimal auction problem with participation costs in the symmetric independent private values setting, where bidders know their valuations when they make independent participation decisions. After characterizing the optimal auction in terms of participation cutoffs, we provide an...

One of the best known ideas in the study of bounded rationality is Simon's satisficing; yet we still lack a standard formalization of the heuristic and its implications. We propose a mathematical model of satisficing which explicitly represents agents' aspirations and which explores both...

Applying techniques developed by Geanakoplos et al. (1989), this paper analyzes the gift exchange between agents with privately observed nonpaternalistic altruism. I find that gift giving between agents under private information of altruism can be analyzed as a conventional signaling game. After...

Consider a situation in which a principal commits to a mechanism first and then agents choose unobservable actions before their payoff-relevant types are realized. The agents' actions may affect not only their payoffs directly but also the distribution of their types as well. This paper extends...

Ability of managers and other nonproduction professionals is key for the productivity of firms. Hence, the assignment of heterogeneous nonproduction workers across firms determines the distribution of productivity. In turn, the transmission of productivity differences into profit differences --...

We examine the spread of a disease or behavior through a social network. In particular, we analyze how infection rates depend on the distribution of degrees (numbers of links) among the nodes in the network. We introduce new techniques using first- and second order stochastic dominance...

We study a market-entry game with a second-mover advantage. In the symmetric equilibrium, there can be a non-monotonic relationship between the probability with which a player will invest (entry) and the length of time until the deadline. Moreover, the probability of investment can move...

According to a common opinion in economic literature, the National Income Test provides a necessary condition for potential Pareto dominance. This paper demonstrates that this statement is true in pure-exchange economies, but, in general, false in production economies.

People reason about real-estate prices both in terms of general rules and in terms of analogies to similar cases. We propose to examine empirically which mode of reasoning fits the data better. To this end, we develop the statistical techniques required for the estimation of the case-based...

We propose a theory of party competition (two parties, single-issue) where citizens acquire party membership by contributing money to a party, and where a member’s influence on the policy taken by her party is proportional to her campaign contribution. The polity consists of informed and...