When politicians negotiate in international climate conventions they may suffer from incomplete information about each other's preferences about reaching an agreement. As is known, this may cause failure to reach an efficient cooperative agreement. We study the role of the clean development...

This paper surveys the theory on taxes on risky returns that originated from Domar and Musgrave (1944). Emphasis is given to the role of complete capital markets and on capital market imperfections arising from limited liability, moral hazard and adverse selection.

Clustering and lack of sufficient diversification in research strategies has been identified as an important problem for delegated research as it takes place in design contests by Erat and Krishnan (2012). We show that this problem can be solved by local competition (such as bribery, lobbying or...

We consider a two-candidate campaign competition in majoritarian systems with many voters. Some voters are loyal, some can be influenced by campaign spending. Own loyalty with respect to a candidate is the voter's private information. Candidates simultaneously choose their campaign budgets and...

This paper considers evolutionarily stable strategies (ESS) in a take-it-or-leave-it offer bargaining game with incomplete information. We find responders reject offers which yield a higher positive material payoff than their outside option. Proposers, in turn, make more attractive offers than...

A woman assessing the wealth of a potential husband may observe some, but not all, of his wealth. She may screen, leading to status consumption and wasteful gift giving. The screening activity is costly both for the potential husband, and for the woman, as it reduces the wealth of the man she...

We study the role of an imbalance in fighting strengths when players bargain in the shadow of conflict. Our experimental results suggest: In a simple bargaining game with an exogenous mediation proposal, the likelihood of conflict is independent of the balance of power. If bargaining involves...

This paper surveys some of the strategic aspects that emerge if players fight in an alliance against an enemy. The survey includes the free-rider problem and the hold-up problem that emerges in the baseline model, the role of super-modularity in alliance members' effort contributions, the role...

This paper develops a competition theory framework that evaluates an important aspect of the OECD's Harmful Tax Practices Initiative against tax havens. We show that the sequential nature of the process is harmful and more costly than a "big bang" multilateral agreement. The sequentiality may...

We investigate redistributive taxation in a political economy experiment and determine how different patterns of social mobility affect the choices of redistributional taxes. In the absence of social mobility, voters choose tax rates that are very well in line with the prediction derived in the...