What is a rational decision-maker supposed to do when facing an unfamiliar problem, where there is uncertainty but no basis for making probabilistic assessments? One answer is to use a form of expected utility theory, and assume that agents assign their own subjective probabilities to each...

In a pure exchange economy with differential information, there may be ex-post Pareto-dominant core allocations which are not attainable as rational expectations equilibria because of information verifiability issues. On the other hand, many of the core allocations in the differential...

This paper studies trade in a first-price sealed bid auction where agents know only a range of possible payoffs. The setting is one in which a winner's curse arises, so that if agents have common risk preferences and common priors, then expected utility theory leads to a prediction of no trade....