We extend the $\Delta$-rationalizability (see Battigalli and Siniscalchi 2003) to infinite strategic form games with incomplete information. The most important feature of the $\Delta$-rationalizability is that there is no specified epistemic type space \`{a} la Harsanyi. However, we can impose a...

We solve in closed form the optimal consumption / portfolio choice problem for the class of isoelastic utility functions under incomplete information about the mean return of the stock price. Our approach consists in converting the original investor's problem into an equivalent program where the...

A core allocation of a complete information economy can be characterized as one that would not be unanimously rejected in favor of another feasible alternative by any coalition. We use this test of coalitional voting in an incomplete information environment to formalize a notion of resilience....

The core is extended to games with incomplete information. The feasible set is characterized by incentive-compatible mechanisms, and blocking may similarly be organized by an incentive compatible mediation plan. Nonemptiness is proven for games with a balanced structure

One of the basic principles that allow a smooth operation of the markets is the equilibrium between supply and demand. According to this principle, when demand exceeds supply, the price mechanism will try to bring the system back into equilibrium. When this thinking is applied to the housing...

Admati and Perry (1987) derive the equilibrium in a bargaining game between a seller and buyer when the buyer's valuation is private information. They show that, for some parameter values, trade occurs at the Rubinstein (1982) prices given the buyer's true valuation (pl if the buyer has a low...

Abstract Mandatory convertibles, which are equity-linked hybrid securities that automatically convert to common stock on a pre-specified date, have become an increasingly popular means of raising capital in recent years (about $20 billion worth issued in 2001 alone). This paper presents the...

This paper shows that monitoring too much a partner in the initial phase of a relationship may not be optimal if the goal is to determine his loyalty to the match and if the cost of ending the relationship increases over time. The intuition is simple: by monitoring too much we learn less on how...

Punitive damage awards have been widely criticized for generating a plaintiff’s windfall (i.e., a payment in excess of the costs of pursuing the punitive claim), which promotes unnecessary litigation, the escalation of liability insurance premiums and over-deterrence. In an attempt to...