We model uniform and discriminatory auctions in wholesale electricity markets. High variability of electricity prices is often explained by exogenous economic factors. We, however, show that it can result endogenously from suppliers' strategic bidding, and that the connection between demand and...

Patents are a useful but imperfect reward for innovation. In sectors like pharmaceuticals, where monopoly distortions seem particularly severe, there is growing international political pressure to identify alternatives to patents that could lower prices. Innovation prizes and other non-patent...

This paper compares the welfare effects of three ways in which health care can be organized: no competition (NC), competition for the market (CfM) and competition on the market (CoM) where the payer offers the optimal contract to providers in each case. We argue that each of these can be optimal...

A classic challenge in contract and property law is unstructured negotiation between two parties with asymmetric information (i.e., each party has different private information) under bilateral monopoly (each party must negotiate with the other to try to reach an agreement), which often leads to...

This paper explores the sale of an object to an ambiguity averse buyer. We show that the seller can increase his profit by using an ambiguous mechanism. That is, the seller can benefit from hiding certain features of the mechanism that he has committed to from the agent. We then characterize the...

We show how repeatedly awarded procurement contracts where unverifiable quality dimensions are relevant can be reinterpreted as relational contracts between a buyer and a contractor that is threatened by a potentially less efficient competitor. We compare two scenarios: 1) Under freedom of...

Information and communication technology plays an important role in achieving a higher level of energy efficiency. In particular, energy efficiency can be achieved by integrating information technology into electricity networks to enable the interaction between suppliers and customers (smart...

This paper shows that a simple two-stage voting mechanism may implement a constrained optimal state dependent decision about a fiscal deficit. I consider a setup with strategic fiscal deficits à la Tabellini and Alesina (1990). Three groups of voters are informed about the productivity of...

Research has shown that the higher penalties for discrimination under the Civil Rights Act of 1991 appear to have induced hiring discrimination. This occurs because employers use the proxy of protected group membership to identify high litigation risk employees in the absence of reliable...

We consider mechanism design in contexts in which agents exhibit bounded depth of reasoning (level k) instead of rational expectations. We use simple direct mechanisms, in which agents report only first-order beliefs. While level 0 agents are assumed to be truth tellers, level k agents...