The goal of this paper is to construct a user-friendly model of unawareness. We start from an axiom system (in first-order modal logic) that enables us to express the following kinds of sentences: “the agent is not sure whether or not there is anything that he is unaware of”, and “I am not...

This paper studies shill bidding in the VCG mechanism applied to combinatorial auctions. Shill bidding is a strategy whereby a single decision-maker enters the auction under the guise of multiple identities (Sakurai, Yokoo, and Matsubara 1999). I formulate the problem of optimal shill bidding...

In this paper, we consider economies in which agents are privately informed about their skills, which are evolving stochastically over time. We require agents’ preferences to be weakly separable between the lifetime paths of consumption and labor. However, we allow for intertemporal...

By allocating dierent information to team members, secret contracts can provide better incentives to perform with an intuitive organizational design. For instance, they may help to monitor monitors, and appoint secret principals. Generally, secret contracts highlight a rich duality between...

This paper establishes and interprets a necessary and sucient condition for existence of (countably additive) correlated equilibrium in n-person games, assuming only that utility functions are bounded, measurable. A sequence of deviation profiles is consistent if there exists a correlated...

In simple one-good international macro models, the presence of non-diversifiable labor income risk means that country portfolios should be heavily biased toward foreign assets. The fact that the opposite pattern of diversification is observed empirically constitutes the international...

This paper studies optimal persuasion. A speaker must decide which arguments to present and a listener which arguments to accept. Communication is limited in that the arguments available to the speaker depend on her information. Optimality is assessed from the listener's perspective assuming...

Although employment at individual firms tends to be highly non-stationary, the employment size distribution of all firms in the United States appears to be stationary. It closely resembles a Pareto distribution. There is a lot of entry and exit, mostly of small firms. This paper surveys general...

This paper studies how advertising influences firms’ incentives to invest in R&D. The link between advertising and industry innovation is important, not only because advertising can spur R&D by spreading product knowledge, but also because advertising can discourage new innovative firms from...

When the rate at which any given blueprint can be replicated is subject to decreasing returns, it is optimal to replicate high-quality blueprints more quickly than low-quality blueprints. The cost of introducing high-quality “start-up” blueprints will also rise with the rate at which they...