We show that, in repeated common interest games without discounting, strong `perturbation implies efficiency' results require that the perturbations must include strategies which are `draconian' in the sense that they are prepared to punish to the maximum extent possible. Moreover, there is a...

The paper analyzes the Nash equilibria of two-person discounted repeated games with one-sided incomplete information and known own payoffs. If the informed player is arbitrarily patient relative to the uninformed player, then the characterization for the informed player's payoffs is essentially...

The fluctuations in incomes inherent in rural communities can be attenuated by reciprocal assistance. A model of reciprocal assistance based upon rational action and voluntary participation is presented. Individuals provide assistance only if the costs of so doing are outweighed by the benefits...

The arguments put forward by Bulow and Rogoff (1988, 1991) against sovereign debt buybacks are re-examined in a willingness-to-pay framework. This paper argues that the Bulow-Rogoff framework treats default by a debtor as an event with no dead-weight loss, and, as such, underestimates the...

This paper introduces staggered wage contracts a la Taylor (1979)into a standard model of monetary policy credibility. The overlapping wage structure is shown to considerably exacerbate the time consistent inflation rate in Markov perfect equilibrium. If the central bank can commit to its...

This paper considers a two-period optimal contracting model in which firms make new hires in the second period subject to the constraint that they cannot pay discriminate either against or in favor of the new hires. Under an assumption on the information available to workers, it is shown that...

This paper examines a dynamic model of mutual insurance when households can also engage in self-insurance by storage. This mutual insurance is informal as it is assumed that there is no enforcement mechanism, so any mutual insurance arrangements must be self-enforcing. It is shown how...

The paper analyzes reputation effects in perturbed repeated games with discounting. If there is some positive prior probability that one of the players is committed to play the same (pure) action in every period, then this provides a lower bound for her equilibrium playoff in all Nash...

A simple oligopolistic common-pool exhaustible resource game is considered. By analysing punishment strategies, including optimal punishments, it is possible to determine which cartel agreements are implementable in a non-cooperative play of the game. Joint-profit maximizing allocations are...