We examine an economy in which the cost of consuming some goods can be reduced by making commitments that reduce flexibility. We show that such consumption commitments can induce consumers with risk-neutral underlying utility functions to be risk averse over small variations in income, but...

We examine an economy in which the cost of consuming some goods can be reduced by making commitments that reduce flexibility. We show that such consumption commitments can induce consumers with risk-neutral underlying utility functions to be risk averse over small variations in income, but...

A search-theoretic model of the retail market for illegal drugs is developed. Trade occurs in bilateral, potentially long-lived matches between sellers and buyers. Buyers incur search costs when experimenting with a new seller. Moral hazard is present because buyers learn purity only after a...

Identical agents gather costly information, and then aggregate it through voting. Because information is a public good, information is underprovided relative to the social optimum. A "good" voting rule must give incentives to acquire information, as well as aggregate information efficiently. A...

A search-theoretic model of the retail market for illegal drugs is developed. Trade occurs in bilateral, potentially long-lived matches between sellers and buyers. Buyers incur search costs when experimenting with a new seller. Moral hazard is present because buyers learn purity only after a...

Identical agents gather costly information, and then aggregate it through voting.Because information is a public good, information is underprovided relative to the social optimum. A "good" voting rule must give incentives to acquire information,as well as aggregate information efficiently. A...

What determines which assets are used in transactions? We develop a framework where the extent to which assets are recognizable determines the extent to which they are acceptable in exchange--i.e. it determines their liquidity. Recognizability and liquidity are endogenized by allowing agents to...

The authors analyze the problem in which agents have nonpublic information and are to play an asymmetric information game. The agents may reveal some or all of their information to other agents prior to playing this game. Revelation is via exogenously specified certifiable statements. The...

We introduce a distinction between a firm and its network of workers. In a competitive world, if networks are easily lured away, the workers must receive the entire value of their contribution to the firm. How then can service firms have equity value? A model is analyzed in which workers are...

A yes or no decision must be made about some issue. All agents must agree. The "Coase theorem" asserts that the efficient outcome will always result. Suppose the value (positive or negative) that an individual attaches to an affirmative decision is privately known to that individual. It is...