We examine a game-theoretic model of a two-firm R&D race in which expenditures on R&D and the concomitant increase in experience/learning enable the firms to increase their probability of discovering an invention. The learning process is stochastic. It generates a unique subgame-perfect...

Pretrial negotiation is a structured environment in which to study bargaining with incomplete information. When a plaintiff believes that a defendant owes him damages, he may first attempt to reach a private settlement before resorting to a costly court-imposed judgment. A central issue in their...

This article characterizes the optimal procurement contract for a monopsonistic purchaser who contracts with a risk-averse supplier with private information about his costs and who contributes an unobservable effort. The costs incurred by the supplier may be uncertain, and the purchaser has...

We examine a dynamic model of price competition in defense procurement that incorporates the experience curve, asymmetric cost information, and the availability of a higher cost alternative system. We model acquisition as a two-stage process in which initial production is governed by a contract...

This article develops the theoretical properties of a new incentive mechanism for regulating a monopoly seller and reports the results of laboratory experimental tests of its behavioral properties. The design of the new mechanism draws upon the results of our earlier experimental research on the...