The relationship between Popper spaces (conditional probability spaces that satisfy some regularity conditions), lexicographic probability systems (LPS’s) [Blume, Brandenburger, and Dekel 1991a; Blume, Brandenburger, and Dekel 1991b], and nonstandard probability spaces (NPS’s) is considered. If countable additivity is assumed, Popper spaces and a subclass of LPS’s are equivalent; without the as...

Job Market Signaling and Employer Learning This paper extends the job market signaling model of Spence (1973) by allowing firms to learn the ability of their employees over time. Contrary to the model without employer learning, we find that the Intuitive Criterion does not always select a unique separating equilibrium. When the Intuitive Criterion bites and information is purely asymmetric, the...

Inequity aversion models have dominated the behavioral economics landscape in the last decade. This study uses variants of dictator and trust games to provide empirical content to these models. We manipulate market features—such as competition over resources—to demonstrate that extant models cannot explain realistic manipulations of either game. For example, we show that if socially acceptable ...

Male and female choices differ in many economic situations, e.g., on the labor market. This paper considers whether such differences are driven by different attitudes towards competition. In our experiment subjects choose between a tournament and a piecerate pay scheme before performing a real task. Men choose the tournament significantly more often than women. Women are mainly influenced by th...

We consider random assignment of multiple indivisible objects. When each agent receives one object, Bogomolnaia and Moulin (2001) show that the probabilistic serial mechanism is ordinally efficient, envy-free and weakly strategy-proof. When each agent receives more than one object, we propose a generalized probabilistic serial mechanism that is ordinally efficient and envy-free but not weakly s...

In this paper, we examine whether farsighted players form the e¢ cient grand coalition structure in coalition formation games. We propose a stability concept for a coalition structure, called sequentially stability, when only bilateral mergers of two separate coalitions are feasible because of high negotiation costs. We provide an algorithm to check the sequential stability of the grand coaliti...

Rothschild and Stiglitz (1976) demonstrated that adverse selection may entail nonexistence of equilibrium in competitive insurance markets. We approach this problem in a dynamic model with boundedly rational insurance rms. Firms' behavior is based on imitation of pro t making contracts, withdrawal of loss making contracts, and experimentation with random contracts. Consumers choose in each peri...

We consider a multimarket framework where a set of firms compete on two interrelated oligopolistic markets. Prior to competing in these markets, firms can spy on others in order to increase the quality of their product. We characterize the equilibrium espionage networks and networks that maximize social welfare under the most interesting scenario of diseconomies of scope. We find that in some s...

9 This article explores the conditions under which agents will cooperate in one-shot two-player Prisoner’s 10 Dilemma games if they are able to withdraw from playing the game and can learn to recognize the 11 trustworthiness of their opponents. When the agents display a number of symbols and they learn which 12 symbols are important to estimate the trustworthiness of others, agents will evolve ...

We provide a novel characterization of the feasible payo¤ set of a general two-player repeated game with unequal discounting. In particular, we show that generically the Pareto frontier shifts outwards and the feasible payo¤ set expands in the sense of set inclusion, as the time horizon increases. This result reinforces and re…nes the insight in Lehrer and Pauzner (1999) by showing that a longe...