We perform a stochastic stability analysis with observation errors. Players recurrently play a symmetric two-player normal form game with one another and respond to the strategy distribution of other players. In each period, a revising player observes the strategy distribution and chooses a best response to it. Her observation is perturbed with positive probability and she may respond to the misperceived

A single-product retailer faces bargain hunting consumers whose willingness to pay incorporates sensations of gain and loss driven by differences between the observed price and prices they rationally expect in the spirit of Koszegi and Rabin (2006). We examine the Bayesian Nash equilibrium (non-commitment) pricing solution in which (i) the retailer maximizes profit given consumers' beliefs and (ii)

Economists have long recognized that the effect of move order on outcomes is non-negligible in sequential contests. We study tiebreak mechanisms used in team sports and known as penalty shootouts through a dynamic model. We characterize all order-independent mechanisms where two balanced teams have equal chances to win the shootout whenever they are tied after equal numbers of attempts; thus, move

We examine the roles of (slightly weakened versions of) the observable substitutability condition and the observable substitutability across doctors condition of Hatfield et al. (2021) in many-to-many matching with contracts. We modify the standard cumulative offer algorithm to find stable outcomes and prove new results on the existence of stable outcomes. It is remarkable that size monotonicity at

This paper studies a multi-prize imperfectly discriminatory contest with symmetric risk-averse contestants. Adopting a multi-winner nested Tullock contest model, we first establish the existence and uniqueness of a symmetric pure-strategy equilibrium under plausible conditions. We then investigate the optimal prize allocation in the contest. Our analysis provides a formal account of the incentive effects

In many real-world matching applications, there are restrictions for institutions either on priorities of their slots or on the transferability of unfilled slots over others (or both). Motivated by the need in such real-life matching problems, this paper formulates a family of practical choice rules, slot-specific priorities with capacity transfers (SSPwCT). These rules invoke both slot-specific priorities

Often monitoring agencies (principal) do not have enough resources to monitor all agents, and violations are unavoidable. Questions arise regarding the structure of the monitoring scheme that minimizes the rate of violations. In dynamic monitoring problems, the principal can use the past behavior of agents to determine her monitoring policy. In this paper, we identify the optimal dynamic monitoring

I study a two-period matching model where one side of the market (e.g. workers) have an option to invest and delay matching in the first period. Investment increases each agent's matching surplus in the second period, by a magnitude of the worker's investment ability in the match pair. Assuming each worker's investment ability is her private information that unfolds in the second period, I define a

Delay after disagreement in committee decision making may foster information aggregation but is costly ex post. When there is an upper bound on delay that can be credibly imposed, repeated delays can improve the ex ante welfare of committee members. An ex ante optimal dynamic delay mechanism does not impose the maximum credible delay after each disagreement. Instead, it induces in equilibrium start-and-stop

This paper studies a multi-state binary choice experiment in which in each state, one alternative has well understood consequences whereas the other alternative has unknown consequences. Subjects repeatedly receive feedback from past choices about the consequences of unfamiliar alternatives but this feedback is aggregated over states. Varying the payoffs attached to the various alternatives in various

This paper endogenizes a monopolist's choice between selling and renting in a non-anonymous durable goods setting with short-term commitment, by allowing for contracts that determine the good's allocation not only at the beginning but also at the end of a given period. We show that the revenue-maximizing menu of contracts features screening by mode of trade when future trade is subject to frictions

We examine the fairness and intensity of sequential round-robin tournaments with multiple prizes and heterogeneous players. A tournament is called fair if the winning probabilities in each match depend only on the players' characteristics but not on the sequence of matches. We show that tournaments with three players will be fair if and only if the second prize is valued half of the first prize. The

We propose a general framework to analyse how vulnerable to manipulation social choice functions are when a limited amount of information about individual preferences is available. We focus then on two properties called WMG-strategy-proofness and group WMG-strategy-proofness. A social choice function is [group] WMG-strategy-proof if it cannot be manipulated by an individual [a coalition of individuals]

This paper studies information disclosure when financial supervisors cannot commit to communicate truthfully. A regulator performs a stress test and chooses whether to disclose bank-specific or aggregate results. Results can be biased at a cost (the higher this cost, the more credible the regulator). Manipulating aggregate information may avoid bank failures, but only if credibility is high enough

We explore how groups deliberate and decide on ideas in an experiment with communication. We find that gender biases play a significant role in which group members are chosen to answer on behalf of the group. Conditional on the quality of their ideas, individuals are less likely to be selected in gender incongruent domains (i.e. male-typed domains for women; female-typed domains for men). Individuals

A durable goods monopolist proposes selling mechanisms in two periods, being unable to commit in the first period on the mechanism to propose in the second. Trade is anonymous and resale is not possible. Although buyers have a continuum of possible valuations, the optimal first-period mechanism is a menu with at most two possibilities: a high price guaranteeing delivery and a low price subject to rationing

We examine a timing game with complete information and observable actions when there is a second-mover advantage. Allowing for heterogenous payoffs between players and for both leader and follower payoff functions to be multi-peaked and non-monotonic, we develop a new solution method to characterize the pure-strategy equilibria. Sometimes these resemble familiar second-mover advantage equilibria from

This paper studies the ex-ante prediction and ex-post evaluation of the effects of cooling-off policies when consumers may exhibit a projection bias. We set up a theoretical model in which a firm optimally reacts to consumers' preferences and the regulatory framework and show that neither the adoption of a mandatory cooling-off period nor a return policy is generically superior or consumer welfare

School authorities in the UK and the US advocate the use of lotteries to desegregate schools. We study a school choice mechanism employed in Berlin where a lottery quota is embedded in the immediate acceptance (IA) mechanism, and compare it to the deferred acceptance mechanism (DA) with a lottery quota. In both mechanisms, some seats are allocated based on academic achievement (e.g., grades), while

We study a dynamic game in which a financial expert seeks to optimize the utilization of her private information either by information disclosure to an investor or by self-use. The investor may be aligned or biased: an aligned investor always cooperates with the expert, whereas a biased investor may strategically betray the expert. We characterize the joint dynamics of the expert's information disclosure

We prove that the Maskin monotonicity⁎ condition (proposed by Bergemann et al. (2011)) fully characterizes exact rationalizable implementation in an environment with lotteries and transfers. Different from previous papers, our approach possesses many appealing features simultaneously, e.g., finite mechanisms with no integer game or modulo game are used; no transfers are made in any rationalizable profile;

The theory of voluntary disclosure of information posits that market forces lead firms (senders) to disclose information through a process of unravelling. This prediction requires that consumers (receivers) hold correct beliefs and, in equilibrium, make adverse inferences about non-disclosed information. Previous research finds that receivers are naïve and do not sufficiently infer non-disclosure as

The signals used in persuasion mechanisms in practice typically satisfy two well-studied simple properties: (i) they partition an ordered state space into intervals, and (ii) they do not recommend lower actions at higher states. These properties have been studied—often separately—in the Bayesian persuasion literature, where conditions for the optimality of such signals are provided in various settings

We present a new framework in which agents with limited and heterogeneous cognitive ability—modeled as finite depths of reasoning—learn from their neighbors in social networks. Each agent tracks old information using Bayes-like formulas, and uses a shortcut when reasoning on behalf of multiple neighbors exceeds her cognitive ability. Surprisingly, agents with moderate cognitive ability are capable

This paper builds on Kojima and Pathak (2009)'s result of vanishing manipulability in large stable mechanisms. We show that convergence toward truth-telling in stable mechanisms can be achieved much faster if colleges' preferences are independently drawn from an uniform distribution. Another novelty from our results is that they can be applied to competitive environments in which virtually all vacancies

The assurance contract mechanism is often used to crowdfund public goods. This mechanism has weak implementation properties that can lead to miscoordination and failure to produce socially valuable projects. To encourage early contributions, we extend the assurance contract mechanism with refund bonuses rewarded only to early contributors in the event of fundraising failure. The experimental results

We analyze a regime change game in which an active defender can invest in costly, unobservable defenses. We show that if there are sufficiently many potential attackers, the game has a unique Nash equilibrium in which the defender chooses to have almost no defenses and attacks almost never occur. This provides a new perspective on coordination problems and the necessity of refinements in regime change

This article presents the first experiment exploring the impact of debarments – the exclusion of colluding bidders – on collusion in procurement auctions. We find that debarments reduce collusion and bids relative to a market with no sanction. The deterrent effect of debarments increases in the length of the punishment. However, shorter debarments reduce efficiency and increase the bids of non-debarred

We initiate the study of the natural multiplayer generalization of the classic continuous Colonel Blotto game. The two-player Blotto game, introduced by Borel (1953) as a model of resource competition across n simultaneous fronts, has been studied extensively for a century and has seen numerous applications throughout the social sciences. Our work defines the multiplayer Colonel Blotto game and derives

We use a large and heterogeneous sample of the Danish population to investigate the importance of distributional preferences for behavior in a trust game and a public good game. We find robust evidence for the significant explanatory power of distributional preferences. In fact, compared to twenty-one covariates, distributional preferences turn out to be the single most important predictor of behavior

An absorbing game is a two-person zero-sum repeated game. Some of the entries are “absorbing” in the sense that, following the play of an absorbing entry, with positive probability all future payoffs are equal to that entry's payoff. The outcome of the game is the long-run average payoff. We prove that a two-person zero-sum absorbing game, with either finite or compact action sets, has, for each ε>0