We study decentralized trade processes in general exchange economies and house allocation problems with and without money. The processes are affected by persistent random shocks stemming from agents' maximization of random utility. By imposing structure on the utility noise term --logit...

Stochastic stability is applied to the problem of exchange. We analyze the stochastic stability of two dynamic trading processes in a simple housing market. In both models traders meet in pairs at random and exchange their houses when trade is mutually beneficial, but occasionally they make...

We study a decentralized matching model in a large exchange economy, in which trade takes place through non-cooperative bargaining in coalitions of finite size. Under essentially the same conditions of core equivalence, we show that the strategic equilibrium outcomes of our model coincide with...

In interim economies with asymmetric information, we show that the coarse core of Wilson (1978) does not converge to price equilibrium allocations as the economy is replicated. This failure of core convergence is a basic consequence of asymmetric information and extends to any reasonable notion...

We characterize the Nash bargaining solution replacing the axiom of Independence of Irrelevant Alternatives with three independent axioms: Independence of Non-Individually Rational Alternatives, Twisting and Disagreement Point Convexity. We give a non-cooperative bargaining interpretation to...

We revisit the well known result that asserts that and increase in the degree of one's risk aversion improves the position one's opponents. for this purpose, we apply Yaari's dual theory of choice under risk both to Nash's bargaining problem and to Rubinstein's game of alternating offers. Within...

This paper examines the effects of school vouchers on public school quality in a simple two-community model with local provision of education. Individuals differ only by income and one community imposes a fixed exogenous costs on its residents. The equilibria of the model are stratified with the...

We study how professional players and college students play zero-sum two-person strategic games in a laboratory setting. We first ask professionals to play a 2x2 game that is formally identical to a strategic interaction situation that they face in their natural environment. Consistent with...

We conduct a field experiment in which highly-ranked chess players play the centipede game in a natural setting. This game represents one of the main paradoxes of backward induction. In the experiment two players alternately are faced with the decision of either taking an exponentially growing...