By identifying types whose low-order beliefs, up to level l(sub i), about the state of nature coincide, we obtain quotient type spaces that are typically smaller than the original ones, preserve basic topological properties, and allow standard equilibrium analysis even under bounded reasoning....

In this paper I consider games in which multiple informed principals simultaneously compete to influence the decisions of a common agent. I focus on the problem of characterizing the equilibrium outcomes of such games. I first show that, to solve this problem, one can invoke neither Myerson’s...

Smart Grid (SG) technologies may bring substantial advantages to society, but the required investments are also sizable. This paper establishes a framework for examining the issues related to the SG, and highlights some of the difficulties in establishing a mechanism for paying SG costs. In...

For two-person complete-information strategic games with transferable utility, all major variable-threat bargaining and arbitration solutions coincide. This conuence of solutions by luminaries such as Nash, Harsanyi, Rai¤a, and Selten, is more than mere coincidence. Staying in the class of...

What is the effect of ambiguity aversion on trade? Although in a Bewley's model ambiguity aversion always lead to less trade, in other models this is not always true. However, we show that if the endowments are unambiguous then more ambiguity aversion implies less trade, for a very general class...

“Those who claim for themselves to judge the truth are bound to possess a criterion of truth.” JEL Code: C18, C53, D89

We study a seller's optimal mechanism for maximizing revenue when the buyer may present evidence relevant to the buyer's value, or when different types of buyer have a differential ability to communicate. We introduce a dynamic bargaining protocol in which the buyer first makes a sequence of...

We derive transition probability matrices for chronic health conditions using survey prevalence data. Matrices are constructed for successive age groups and the sequence represents the “age dynamics” of the health conditions for a stationary population – the probabilities of acquiring the...

It has long been recognized that taxing a commodity that generates negative externalities can be used to reduce the consumption of that commodity. A variant involves the imposition of revenue neutrality but that may alter the tax rate required to meet a consumption reduction target. We explore...

Consumer-related policy decisions often require analysis of aggregate responses or mean elasticities. However, in practice these mean elasticities are seldom used. Mean elasticities can be approximated using aggregate data, but that introduces aggregation bias for full and compensated price...