We introduce a model with strategic voting in a parliamentary election with proportional representation and uncertainty about voters' preferences. In any equilibrium of the model, most voters only vote for those parties whose positions are extreme. In the resulting parliament, a consensus...

Uncertainty pervades most aspects of life. From selecting a new technology to choosing a career, decision makers rarely know in advance the exact outcomes of their decisions. Whereas the consequences of decisions in standard decision theory are explicitly described (the decision from description...

We compare the performance of liability rules for managing environmental disasters when third parties are harmed and cannot always be compensated. A firm can invest in safety to reduce the likelihood of accidents. The firm's investment is unobservable to authorities. Externality and asymmetric...