We contrast a standard deterministic signaling game with a variant where the signal-generating mechanism is subject to stochastic perturbations. In the theoretical part, we obtain a unique equilibrium with stochastic signals. This equilibrium is separating and has intuitive comparative-static...

We analyze the dynamics of a game of sequential bidding in the presence of stochastic scale effects in the form of stochastic economies or diseconomies of scale. We show that economies give rise to declining expected equilibrium prices, whereas the converse is not generally true. Moreover,...

We study how financial intermediation affects real market variables when an incumbent firm is threatened by entry to its market and must contract with a bank for outside funds. Contracts between the bank and the monopolist are short-term and redesigned after the entry decision of a second firm...

We study how the threat of entry affects financial contracting between an incumbent firm and a bank, in a stochastic and dynamic environment. Contracts are short term and public. We determine the effects of the first period financial contract on the first period outputs in face of the threat of...

We contrast a standard deterministic signaling game with one where the signal-generating mechanism is stochastic. With stochastic signals a unique equilibrium emerges that involves separation and has intuitive comparative-static properties as the degree of signaling depends on the prior type...