Evidence Games: Truth and Commitment

By Sergiu Hart, Ilan Kremer, and Motty Perry

American Economic Review, March 2017

An evidence game is a strategic disclosure game in which an informed agent who has some pieces of verifiable evidence decides which ones to disclose to an uninformed principal who chooses a reward. The agent, regardless of his information, prefers the rew...

Strategic Vote Trading in Power Sharing Systems

By Dimitrios Xefteris and Nicholas Ziros

American Economic Journal: Microeconomics, May 2017

This paper studies decentralized vote trading in a power sharing system that follows the rules of strategic market games. In particular, we study a two-party election in which prior to the voting stage, voters are free to trade votes for money. Voters hol...

Disclosure and Legal Advice

By Yeon-Koo Che and Sergei Severinov

American Economic Journal: Microeconomics, May 2017

This paper examines how the advice that lawyers provide to their clients affects the disclosure of evidence and the outcome of adjudication, and how the adjudicator should allocate the burden of proof in light of these effects. Despite lawyers' expertise ...

Aggregate Uncertainty Can Lead to Incorrect Herds

By Ignacio Monzón

American Economic Journal: Microeconomics, May 2017

A continuum of homogeneous rational agents choose between two competing technologies. Agents observe a private signal and sample others' previous choices. Signals have an aggregate component of uncertainty, so aggregate behavior does not necessarily refle...

Bounded Rationality and Robust Mechanism Design: An Axiomatic Approach

By Luyao Zhang and Dan Levin

American Economic Review, May 2017

We propose an axiomatic approach to study the superior performance of mechanisms with obviously dominant strategies to those with only dominant strategies. Guided by the psychological inability to reason state-by-state, we develop Obvious Preference as a ...

Law, Coercion, and Expression: A Review Essay on Frederick Schauer's The Force of Law and Richard McAdams's The Expressive Powers of Law

By Eric Rasmusen

Journal of Economic Literature, September 2017

What is law and why do people obey it? This question from jurisprudence has recently been tackled using the tools of economics. The field of law and economics has long studied how fines and imprisonment affect behavior. Nobody believes, however, that all ...

Multiple Activities in Networks

By Ying-Ju Chen, Yves Zenou, and Junjie Zhou

American Economic Journal: Microeconomics, August 2018

We consider a network model where individuals exert efforts in two types of activities that are interdependent. These activities can be either substitutes or complements. We provide a full characterization of the Nash equilibrium of this game for any netw...

The Impact of Monitoring in Infinitely Repeated Games: Perfect, Public, and Private

By Masaki Aoyagi, V. Bhaskar, and Guillaume R. Fréchette

American Economic Journal: Microeconomics, February 2019

This paper uses a laboratory experiment to study the effect of the monitoring structure on the play of the infinitely repeated prisoner's dilemma. Keeping the strategic form of the stage game fixed, we examine the behavior of subjects when information abo...

The Evolution of Cooperation: The Role of Costly Strategy Adjustments

By Julian Romero and Yaroslav Rosokha

American Economic Journal: Microeconomics, February 2019

We study the evolution of cooperation in the indefinitely repeated prisoner's dilemma when it is costly for players to adjust their strategy. Our experimental interface allows subjects to design a comprehensive strategy that then selects actions for the...

Multidimensional Reasoning in Games: Framework, Equilibrium, and Applications

By Ayala Arad and Ariel Rubinstein

American Economic Journal: Microeconomics, August 2019

We develop a framework for analyzing multidimensional reasoning in strategic interactions, which is motivated by two experimental findings: (i) in games with a large and complex strategy space, players tend to think in terms of strategy characteristics ra...

Crises: Equilibrium Shifts and Large Shocks

By Stephen Morris and Muhamet Yildiz

American Economic Review, August 2019

We study the informational events that trigger equilibrium shifts in coordination games with incomplete information. Assuming that the distribution of the changes in fundamentals has fat tails, we show that majority play shifts either if fundamentals reac...

Disguising Lies—Image Concerns and Partial Lying in Cheating Games

By Kiryl Khalmetski and Dirk Sliwka

American Economic Journal: Microeconomics, November 2019

We study equilibrium reporting behavior in cheating games when agents have a fixed cost of lying and image concerns not to be perceived as a liar. We show that equilibria naturally arise in which agents with low costs of lying randomize among a set of the...

Information Design

By Ina Taneva

American Economic Journal: Microeconomics, November 2019

A designer commits to a signal distribution that is informative about a payoff-relevant state. Conditional upon the privately observed signals, agents take actions that affect their payoffs as well as those of the designer. We show how to derive the (desi...

Strategy Choice in the Infinitely Repeated Prisoner's Dilemma

By Pedro Dal Bó and Guillaume R. Fréchette

American Economic Review, November 2019

We use a novel experimental design to reliably elicit subjects' strategies in an infinitely repeated prisoner's dilemma experiment with perfect monitoring. We find that three simple strategies represent the majority of the chosen strategies: Always Defect...

Diffusing Coordination Risk

By Deepal Basak and Zhen Zhou

American Economic Review, January 2020

In a regime change game, privately informed agents sequentially decide whether to attack without observing others' previous actions. To dissuade them from attacking, a principal adopts a dynamic information disclosure policy, frequent viability tests. A v...

A Single-Judge Solution to Beauty Contests

By Zhen Huo and Marcelo Pedroni

American Economic Review, February 2020

We show that the equilibrium policy rule in beauty contest models is equivalent to that of a single agent's forecast of the economic fundamental. This forecast is conditional on a modified information process, which simply discounts the precision of idios...

Evolution of Social Behavior: Individual and Group Selection

[Symposium: Evolutionary Economics]

By Theodore C. Bergstrom

Journal of Economic Perspectives, Spring 2002

How selfish does our evolutionary history suggest that humans will be? We explore models in which groups are formed and dissolved and where reproduction of individuals is determined by their payoffs in a game played within groups. If groups are formed "ra...

Revealed Preference Implications of Backward Induction and Subgame Perfection

By Pablo Schenone

American Economic Journal: Microeconomics, May 2020

Consider a decision-maker (DM) who must select an alternative from a set of mutually exclusive alternatives but must take this decision sequentially. If the DM's choice correspondence over subsets of alternatives satisfies the weak axiom of revealed prefe...

Cross-Country Differences in Intergenerational Earnings Mobility

[Symposium: Intergenerational Mobility]

By Gary Solon

Journal of Economic Perspectives, Summer 2002

International studies of the extent to which economic status is passed from one generation to the next are important for at least two reasons. First, each study of a particular country characterizes an important feature of that country's income inequality...

The Theory of the Firm as Governance Structure: From Choice to Contract

By Oliver E. Williamson

Journal of Economic Perspectives, Summer 2002

The propositions that organization matters and that it is susceptible to analysis were long greeted by skepticism by economists. One reason why this message took a long time to register is that it is much easier to say that organization matters than it is...