This paper presents and tests a simple model of competitive and unilateral market power regimes that yields countercyclical markups. Following a decrease in demand in the short run, capacity-constrained firms may have a strong incentive not to lower their prices to the new competitive price....

We use numerical methods to compute Nash equilibrium (NE) bid functions for four agents bidding in a first-price auction. Each bidder i is randomly assigned: ri ɛ [0, rmax], where 1 − ri is the Arrow-Pratt measure of constant relative risk aversion. Each ri is independently drawn from...

A reciprocal action is an action meant to have a similar influence on another's payoff as another's action has on one's own. One hypothesis asserts that reciprocal action is triggered by the reciprocator's belief that another's action was good or ill intended. The other hypothesis says that the...

This article reports two experiments that compared the standard ultimatum game played by individuals with the same game played by three-person groups. In the group treatment, the members of the allocating group conducted a brief, face-to-face discussion in order to decide, as a group, on a...

The sealed bid k-double auction is a mechanism used to structure bilateral bargaining under two-sided incomplete information. This mechanism is tested in two experiments in which subjects are asked to bargain repeatedly for 50 rounds with the same partner under conditions of information...

Countless experimental studies have shown that markets converge quickly and efficiently to the competitive outcome under many trading institutions, particularly the double auction mechanism. This creates difficulties for Keynesian stories of unemployment creation—which suggest a...

This article investigates the use of standard econometric models for quantal choice to study equilibria of extensive form games. Players make choices based on a quantal-choice model and assume other players do so as well. We define an agent quantal response equilibrium (AQRE), which applies QRE...