Monetary theorists have advanced an intriguing notion: we exchange money to make up for a lack of enforcement, when it is difficult to monitor and sanction opportunistic behaviors. We demonstrate that, in fact, monetary equilibrium cannot generally be sustained when monitoring and punishment...

In a Bertrand-oligopoly experiment, firms choose whether or not to engage in cartel-like communication and, if so, they may get fined by a cartel authority. We find that four-firm industries form cartels more often than duopolies because they gain less from a hysteresis effect after cartel...

Studies of cooperation in infinitely repeated matching games focus on homogeneous economies, where full cooperation is efficient and any defection is collectively sanctioned. Here we study heterogeneous economies where occasional defections are part of efficient play, and show how to support...

I study the path properties of adaptive heuristics that mimic the natural dynamics of play in a game and converge to the set of correlated equilibria. Despite their apparent differences, I show that these heuristics have an abstract representation as a sequence of probability distributions that...

As the Copenhagen Accord indicates, most of the international community agrees that global mean temperature should not be allowed to rise more than two degrees Celsius above preindustrial levels to avoid unacceptable damages from climate change. The scientific evidence distilled in the Fourth...

We introduce a novel method to elicit strategies in indefinitely repeated games and apply it to games of strategic substitutes and complements. We find that out of 256 possible unit recall machines (and 1024 full strategies) participants could use, only five machines are used more than 5 percent...

We design a transboundary public goods (TPG) game, in which participants have simultaneous interaction within and between groups. We design the TPG game under an infinitely repeated situation in order to explore the types of strategies that participants employ in infinitely repeated games. We...

The so-called El Farol problem describes a prototypical situation of interacting agents making binary choices to participate in a non-cooperative environment or to stay by themselves and choosing an outside option. In a much cited paper Arthur (1994) argues that persistent on-converging...

A well established belief both in the game-theoretic IO and in policy debates is that market concentration facilitates collusion. We show that this piece of conventional wisdom relies upon the assumption of profit-seeking behaviour, for it may be reversed when firms pursue other plausible goals....

Consider a two-player discounted infinitely repeated game. A player's belief is a probability distribution over the opponent's repeated game strategies. This paper shows that, for a large class of repeated games, there are no beliefs that satisfy three conditions, learnability, consistency, and...