Rubinstein and Wolinsky (1990) show that a simple homogeneous market with exogenous matching has continuum of (non-competitive) perfect equilibria, but the unique Markov perfect equilibrium is competitive. By contrast, in the more general case of heterogeneous markets, we show there exists a...

This paper considers the ‘negotiation game’ (Busch and Wen [4]) which combines the features of two-person alternating offers and repeated games. Despite the forces of bargaining, the negotiation game in general admits a large number of equilibria, some of which involve delay in agreement and...

This paper examines repeated implementation of a social choice function (SCF) with infinitely-lived agents whose preferences are determined randomly in each period. An SCF is repeated-implementable in (Bayesian) Nash equilibrium if there exists a sequence of (possibly history-dependent)...

Confirmation bias refers to cognitive errors that bias one towards one's own prior beliefs. A vast empirical literature documents its existence and psychologists identify it as one of the most problematic aspects of human reasoning. In this paper, we present three related scenarios where...

Rational herd behavior and informationally efficient security prices have long been considered to be mutually exclusive but for exceptional cases. In this paper we describe the conditions on the underlying information structure that are necessary and sufficient for informational herding and...

The authors investigate the effect of introducing costs of complexity in the n- person unanimity bargaining game. In particular, the paper provides a justification for stationary equilibrium strategies in the class of games where complexity costs matter. As is well-known, every individually...

We consider a multi-award generalisation of King Solomon’s problem: k identical and indivisible awards should be distributed among agents, k < n, with the top k valuation agents receiving the awards. Agents have complete information about each other’s valuations. Glazer and Ma (1989) analysed the single-prize (i.e. k = 1) version of this problem. We show that in the ‘more than two agents’ problem the mechanism of Glazer and Ma admits inefficient equilibria and thus fails to solve Solomon’s problem. So, first we modify their mechanism to rule out inefficient equilibria and implement efficient prize allocation in sub-game perfect equilibrium when there are at least three agents. Then it is shown that a simple repeated application of our modified mechanism will distribute k (>1) prizes efficiently in sub-game perfect equilibria without any monetary transfers in equilibrium. Finally, in the multi-awards case we relax the...</n,>

How are state-owned entreprises to be reformed? Privatisation seems to be the obvious solution. This essay argues that entreprises reform in the transition should focus on enhancing managerial.

In the evolutionary setting for a financial market developed by Blume and Easley (1992) the author considers an infinitely repeated version of a model B la Grossman and Stiglitz (1980) with asymmetrically informed traders. Informed traders observe the realisation of a payoff relevant signal...

In this paper we examine the spatial and temporal distribution of per capita income across Europe. We base our analysis on a cluster methodology which allows for an endogenous selection of regional clusters using a multivariate test for stationarity where the number and composition of clusters...