We examine an evolutionary model with "local interactions," so that some agents may be more likely to interact than others. We show that equilibrium strategy choices with given local interactions correspond to correlated equilibria of the underlying game, suggesting an new interpretation for...

This paper provides a theoretical foundation for Markov (perfect) equilibria in repeated games with asynchronous moves that is based on memory costs. We show that if players incur a ``complexity cost'' which depends on the memory length required by their strategies, then any rationalizable...

We analyze a model of repeated bilateral trade with moral hazard, where the quality of goods received can differ from the quality despatched due to deterioration during transportation. Since the sender does not observe the quality of good received and the receiver does not observe the quality...

We analyze the problem of coordinating upon asymmetric equilibria in a symmetric game, such as the battle-of-the-sexes. In repeated interaction, asymmetric coordination is possible possible via symmetric repeated game strategies. This requires that players randomize initially and adopt a...

064Taylor's model of staggered contracts is an influential explanation for nominal inertia and the persistent real effects of nominal shocks. However, in standard imperfect competition models, if agents are allowed to choose the timing of pricing decisions, they will typically choose to...

We analyze models of product differentiation with perfect price discrimination and free entry. Although perfect price discrimination ensures efficient output decisions given product characteristics, coordination failures may prevent efficiency in the choice of product characteristics. More...

Recent empirical work on the effects of minimum wages has called into question the conventional wisdom that minimum wages invariably reduce employment. We develop a model of \emph{monopsonistic competition} with \emph{free entry} to analyze the effects of minimum wages, and our predictions fit...

A number of theories (search and efficiency wages) have been developed, in part, to explain why identically able workers are often paid different wages. However, when there is a minimum wage, they do not explain the resulting ``spike" in the wage distribution. Our model's predictions are...

We analyze the effects of a legally-binding price floor using Hotelling's model of locational competition. A moderate price-floor destroys the maximal differentiation equilibrium of d'Aspremont et. al., by allowing firms to compete more aggressively for market share. Minimum differentiation...