Published in The B.E. Journal of Theoretical Economics
We revisit the linear Cournot model with uncertain demand that is studied in Lagerlöf (2006. “Equilibrium Uniqueness in a Cournot Model with Demand Uncertainty.” The B.E. Journal of Theoretical Economics 6, no. 1. (Topics), Article 19: 1–6.) and provide sufficient conditions for equilibrium uniqueness that complement the existing results. We show t...
Published in The B.E. Journal of Theoretical Economics
This paper investigates theoretically and experimentally the social benefits and cost to have an endogenous punishment-enforcing authority in public goods game. An authority is chosen among members of a society via an imperfectly discriminating contest prior to a public goods game. Once chosen the authority has a large degree of discretion to infli...
Published in The B.E. Journal of Theoretical Economics
In an environment in which a buyer and a seller make ex-ante investments, competition among sellers can solve the hold-up problem without the design of ex-ante contracts but, in the case of low levels of competition, this may lead to inefficient investments. This paper shows that a seller invests efficiently when each seller offers latent contracts...
Published in The B.E. Journal of Theoretical Economics
I develop a model of inequality aversion and public goods that allows the marginal rate of substitution to be variable. As a theoretical foundation, utility function of the standard public goods model is nested in the Fehr-Schmidt model. An individual’s contribution function for a public good is derived by solving the problem of kinky preference an...
Published in The B.E. Journal of Theoretical Economics
Disequilibrium trade can occur in a market lacking both recontracting and a computational system that maps utilities into prices. This paper studies disequilibrium trade in a large market for an indivisible good. We focus on the possible speed of adjustment when arbitrage among periods is feasible and the surplus loss. We find that incentive compat...
Published in The B.E. Journal of Theoretical Economics
Two well-known mechanisms for enhancing managers’ accountability are yardstick competition and internal monitoring. Yardstick competition puts managers in direct competition when firms make decisions for re-appointment. Monitoring is used by firms to detect managers’ rent-seeking activities. While common wisdom suggests that the joint use of the tw...
Published in The B.E. Journal of Theoretical Economics
This paper studies different welfare-enhancing roles that fiat money can have. To do so, we consider an indivisible monetary framework where agents are randomly and bilaterally matched, while the government has weak enforcement powers. Within this environment, we analyze state contingent monetary policies and characterize the resulting equilibria u...
Published in The B.E. Journal of Theoretical Economics
Many countries use a centralized admission system for admitting students to universities. Typically, each student reports a ranking of his preferred colleges to a planner, and the planner allocates students to colleges according to the rules of a predefined mechanism. A recurrent feature in these admission systems is that students are constrained i...
Published in The B.E. Journal of Theoretical Economics
This paper studies the equilibria of contribution games with commitment and with cheap talk under incomplete information. When agents contribute to a club good, we find that with commitment, high types contribute early to induce low types to contribute in later rounds. With cheap talk, low types signal to contribute early but may drop out later if ...
Published in The B.E. Journal of Theoretical Economics
This paper develops a model with overlapping generations to show that human capital formation can potentially attenuate factor price movements in response to fertility shocks if education spending per child is inversely related to the size of the generation subject to the fertility shock. The degree of attenuation depends on the effectiveness of ed...
