We present a new model for reasoning about the way information is shared among friends in a social network and the resulting ways in which the social network fragments. Our model formalizes the intuition that revealing personal information in social settings involves a trade-off between the...

A population of fully rational agents plays a symmetric 2-player game in biological fitnesses, but each agentʼs play is determined by his payoffs, which are free to evolve according to “survival of the fittest” pressures. An equilibrium-selection mechanism is assumed to exist, and deliver a...

This paper introduces a new coordination problem for a large but finite population – The Language Game. The population is partitioned into two groups of identical agents. Each player shares a common two-action strategy set and interacts pairwise with everyone else. Both symmetric profiles are...

We consider the dynamics of reasoning by general rules (theories) and by specific cases (analogies). When an agent faces an exogenous process, we show that, under mild conditions, if reality happens to be simple, the agent will converge to adopt a theory and discard analogical thinking. If,...

The common prior assumption is pervasive in game-theoretic models with incomplete information. This paper investigates experimentally the importance of inducing a correct common prior in a two-person signaling game. Equilibrium selection arguments predict that different equilibria may be...

We study cooperation in economies of indefinite duration. Participants faced a sequence of prisonerʼs dilemmas with anonymous opponents. We identify and characterize the strategies employed at the individual level. We report that (i) grim trigger does not describe well individual play and there...

This note considers equilibrium selection in common-value second-price auctions with two bidders. We show that for each ex post equilibrium in continuous and undominated strategies, a sequence of “almost common-value” auctions can be constructed such that each of them possesses a unique...

An individualʼs learning rule is completely uncoupled if it does not depend directly on the actions or payoffs of anyone else. We propose a variant of log linear learning that is completely uncoupled and that selects an efficient (welfare-maximizing) pure Nash equilibrium in all generic...

We use a laboratory experiment to study bargaining with random implementation. We modify the standard Nash demand game so that incompatible demands do not necessarily lead to the disagreement outcome. Rather, with exogenous probability q, one bargainer receives his/her demand, with the other...

We study whether allowing players to sign binding contracts governing future play leads to reputation effects in repeated games with long-run players. We proceed by extending the analysis of Abreu and Pearce (2007) by allowing for the possibility that different behavioral types may not be...