We show the existence of a pure strategy, symmetric, increasing equilibrium in dou- ble auction markets with correlated, conditionally independent private values and many participants. The equilibrium we ï¬nd is arbitrarily close to fully revealing as the market size grows. Our results provide...

This paper builds a theory of trust based on informal contract enforcement in social networks. In our model, network connections between individuals can be used as social collateral to secure informal borrowing. We define network-based trust as the highest amount one agent can borrow from...

This paper shows that larger auctions are more efficient than smaller ones, but that despite this scale effect, two competing and otherwise identical markets or auction sites of different sizes can coexist in equilibrium. We find that the range of equilibrium market sizes depends on the...

We decompose the beauty premium in an experimental labor market where “employers†determine wages of “workers†who perform a maze-solving task. This task requires a true skill which we show to be unaffected by physical attractiveness. We find a sizable beauty premium and can...

Advances in communication and transportation technologies have the potential to bring people closer together and create a "global village." However, they also allow heterogeneous agents to segregate along special interests, which gives rise to communities fragmented by type rather than by...

We conduct online field experiments in large real-world social networks in order to decompose prosocial giving into three components: (1) baseline altruism toward randomly selected strangers, (2) directed altruism that favors friends over random strangers, and (3) giving motivated by the...

The repeated Prisoner's Dilemma is usually known as a story of tit-for-tat (TFT). This remarkable strategy has won both of Robert Axelrod's tournaments. TFT does whatever the opponent has done in the previous round. It will cooperate if the opponent has cooperated, and it will defect if the...

We derive a simplified version of the model of Fudenberg and Levine, 2006 and Fudenberg and Levine, 2011 and show how this approximate model is useful in explaining choice under risk. We show that in the simple case of three outcomes, the model can generate indifference curves that “fan...

The theory of learning in games studies how, which and what kind of equilibria might arise as a consequence of a long-run non-equilibrium process of learning, adaptation and/or imitation. If agents’ strategies are completely observed at the end of each round, and agents are randomly...