Game-theoretic models consist of a formal game structure and an informal model narrative or story. When game theory is employed to model economic situations, the stories play a central role in interpreting, constructing and solving game structures. We analyse the architecture of game theory and...

We analyse procurement auctions in which sellers are distinguished on the basis of the ratios of quality per unit of money that they offer. Sellers are privately informed on the offered quality of the technology or good. We assume that the procurer cannot perfectly identify the best offer. Thus,...

Review of: Game Theory: 5 Questions. By Vincent F. Hendricks and Pelle Guldborg Hansen. 2004. Automatic Press/VIP: Denmark. no abstract available.

We show that the optimal prize structure of symmetric n-player Tullock tournaments assigns the entire prize pool to the winner, provided that a symmetric pure strategy equilibrium exists. If such an equilibrium fails to exist under the winner-take-all structure, we construct the optimal prize...

Decision-making processes are studied using non-standard all-pay structures. Our interest is motivated by regulatory, political, legal, military, and economic applications in which individual actions determine the consequences for a larger group or the general public. The common features of...

We revisit the classical result that taxation of private consumption is distortionary and therefore precludes the efficient provision of public goods. We introduce a nonlinear consumption tax which we call a ‘tax lottery’. Under this scheme, an ad-valorem consumption tax is supplemented with...

We study the alternating-offers bargaining problem of assigning an indivisible and commonly valued object to one of two players who jointly own this object. The players are asymmetrically informed about the object's value and have veto power over any settlement. There is no depreciation during...

We develop the idea of using mean-variance preferences for the analysis of the first-price, all-pay auction. On the bidding side, we characterise the optimal strategy in symmetric all-pay auctions under mean-variance preferences for general distributions of valuations and any number of bidders....