We study the behaviour of prices and quantities in a model of bilateral trade with coordination frictions, capacity constraints, and risk aversion in small and large markets. The equilibrium markup over the expected return to the asset depends on the ratio of buyers to sellers and the level of...

Protection of common natural resources is one of the foremost challenges facing our society. Since Garrett Hardin published his immensely influential The Tragedy of the Commons, theorists have contemplated the best way to save common-pool resources—national parks, fisheries, heritage sites,...

Under uncertainty, regret is a function depending on both the realized outcome and forgone outcome on a state. This paper studies a general and simple model that only regret-based decisions are assumed without other restrictions such as additive separability, the existence of objective...

Europe was where research on general equilibrium models with rationing (GEMR) gained traction. The goal of our article is to explain how and why. We show that research on GEMR took off and developed in France and Belgium from the mid-1970s before expanding all around Europe. We also show that...

In contracts, the choice between vague standards and precise rules is central to both theory and practice. According to traditional contract theory, parties make this choice by balancing “front-end” transaction costs against “back-end” enforcement costs, apparently through a joint...

Common resources may be managed with inefficient policies for the sake of equity. We study how rationing the commons shapes the efficiency and equity of resource use, in the context of agricultural groundwater use in Rajasthan, India. We find that rationing binds on input use, such that farmers,...

Die Situation ist sehr ernst. Etliche Gaskunden werden im Winter ihre Heizung herunterdrehen oder ihre Produktion herunterfahren müssen. Je kälter der Winter, desto größer das Problem. Ökonomen sind sich weitgehend einig, dass die Politik die Entscheidung, wer wie viel Gas einspart, dem...