In this paper we address the question of collusion in mechanisms under asymmetric information by assuming that one of the colluding parties offers a side contract to the other one. We develop a methodology to analyze collusion as an informed principal problem. We show that if collusion occurs...

In this paper we address the question of collusion in mechanisms under asymmetric information. We develop a methodology to analyze collusion as an informed principal problem. First, if collusion occurs after the agents accept or reject the principal's offer; the dominant-strategy implementation...

The problem of coordination failure, particularly in 'team production' situations, is central to a large number of mircroeconomic as well as macroeconomic models. As this type of inefficient coordination poses a severe economic problem, there is a need for institutions that foster efficient...

We identify and investigate the basic `hold-up' problem which arises whenever each party to a contingent contract has to pay some ex-ante cost for the contract to become feasible. We then proceed to show that, under plausible circumstances, a `contractual solution' to this hold-up problem is not...

It has been argued that collusion among the members of an organization or a vertical structure creates efficiency losses, and hence should be prevented. This paper shows that whenever collusion takes the form of co-insurance agreements, here called `friendships', among the members of a vertical...

The study of evolutionary dynamics was so far mainly restricted to finite strategy spaces. In this paper we show that this restriction is in most cases unnecessary. We give a mild condition under which the continuous time replicator dynamics are well defined for infinite strategy spaces....

Two refinements, called value oriented equilibria, of the Nash equilibrium concept are proposed for repeated games of complete information. Value sufficient equilibria make each player's strategic response to the another player's previous actions depend only on the value of those actions to the...

Fictitious play is the classical myopic learning process, and games with strategic complementarities are an important class of games including many economic applications. Knowledge about convergence properties of fictitious play in this class of games is scarce, however. Beyond dominance...

We present the Progressive Second Price auction, a new decentralized mechanism for allocation of variable-size shares of a resource among multiple users. Unlike most mechanisms in the economics litterature, PSP is designed with a very small message space, making it suitable for real-time market...