Two agents exchange their guesses about a state of the world infinitely many times. A small departure from common knowledge of rationality can have a severe impact on the beliefs and behavior of an extremist: while initial periods of disagreement produce a temporary convergence of beliefs,...

A merger of two companies that are active in seemingly unrelated markets creates data linkage: by selling a product in one market, the merged company acquires informational advantage in a competitive insurance market. In the insurance market, the informed insurer earns an economic rent through...

Two agents sincerely exchange their best guesses about the state of the world infinitely many times. When each agent places a small positive probability on the event that her opponent is of some finite level of reasoning and initial disagreement is large enough (that is, private signals are...

What is the optimal diversity of expertise in a team? Prat (2002) shows that a supermodular production function (which describes strategic complementarity between individual outputs) implies a lower optimal diversity than a submodular function (which corresponds to strategic substitutability)....

We study optimal diversity (in expertise) in hiring decisions. The key trade-off our model captures is that while higher diversity increases the pool of knowledge in a team, it also makes communication between the hired experts more challenging. The optimal diversity balances this trade-off. We...

An agent learns in continuous time from two information sources, each associated with a hypothesis. If a hypothesis is true, the associated source confirms it at a positive rate. False hypotheses are never confirmed. The agent's optimal learning strategy has two phases. During the first phase,...