We use a signaling game to evaluate the incentives that affect an inventor's decision whether to work in a firm's lab or establish a start-up. The model predicts that in a "free market", in a high payoff project and in the firm's lab, the inventor's compensation will be a proportion of the...

We reexamine the role of prices and advertising expenditures as signals of quality. Consumers are either "fastidious" or "indifferent". Fastidious individuals value high quality more and low quality less than do indifferent individuals. Then a sensible and robust separating equilibrium exists in...

We use a signaling game to evaluate the incentives that affect an inventor's decision whether to work in a firm's lab or establish a start-up. The model predicts that in a "free market", in a high payoff project and in the firm's lab, the inventor's compensation will be a proportion of the...

To portray themselves in a favorable light, people often choose options with socially-desirable symbolic qualities. But when all the options in the choice-set have similar socially-desirable attributes, how might people choose? We propose that people use the degree of variety in their selections...

We study two-sided markets with a finite numbers of agents on each side, and with two-sided incomplete information. Agents are matched assortatively on the basis of costly signals. A main goal is to identify conditions under which the potential increase in expected output due to assortative...