This paper reinterprets the γ -core (Chander and Tulkens (1995, 1997)) and justifies it as well as its prediction that the efficient coalition structure is stable in terms of the coalition formation theory. It is assumed that coalitions can freely merge or break apart, are farsighted (that is, it is the final and not the immediate payoffs that matter to the coalitions) and a coalition may devia...

This paper studies the relevance of equilibrium and nonequilibrium explanations of behavior, with respects to equilibrium refinement, as players gain experience. We investigate this experimentally using an incomplete information sequential move game with heterogeneous preferences and multiple perfect equilibria. Only the limit point of quantal response (the limiting logit equilibrium), and alte...

We analyze amodel in which firms are able to acquire information about product risks and may or may not be required to disclose this information. We initially study the effect of disclosure rules assuming that firms are not liable for the harm caused by their products. Mandatory disclosure is obviously superior to voluntary disclosure given the information about product risks that firms possess...

Two agents jointly operate a decreasing marginal returns technology to produce a private good. We characterize the class of output-sharing rules for which the labor-supply game has a unique Nash equilibrium. It consists of two families: rules of the serial type which protect a small user from the negative externality imposed by a large user, and rules of the reverse serial type, where one agent...

For a durable consumption good which turns into waste after consumption, the socially optimal durability increases with an increase in the marginal environmental damage. In a laissez-faire equilibrium under perfect competition, producers fail to provide an efficient product design, i.e. durability is inefficiently small, whereas the amount of solid waste is inefficiently large. The market failu...

This article studies the optimal use of fines and imprisonment when an offender’s level of wealth cannot be observed by the enforcement authority. I employ a model in which there are two types of offenders — a low-wealth type and a high-wealth type. The consequence of the unobservability of wealth depends on whether the enforcement authority would employ fines alone, or would also impose impris...

Two agents jointly operate a decreasing marginal returns technology to produce a private good. We characterize the class of output-sharing rules for which the labor-supply game has a unique Nash equilibrium. It consists of two families: rules of the serial type which protect a small user from the negative externality imposed by a large user, and rules of the reverse serial type, where one agent...

We investigate how the patterns of consumption and accumulation, as well as the patterns of time allocation and of social interaction, may be influenced by ‘social pressure’, i.e., by the choices of others. We display an evolutionary model involving several generations of interacting individuals, in which different patterns may coexist in equilibrium and in which path dependence and critical ma...

In this paper we study political-economy determinants of the differentiation of environmental taxes between sectors. Using a common-agency model, we provide predictions on tax differentiation which are then tested using data from the German Ecological Tax Reform. As the reform is revenue neutral and reduces labor costs, tax differentiation is not only determined by the activity of lobby groups ...

The Shapley value assigns, to each game that is adequately represented by its characteristic function, an outcome for each player. An elaboration on the Shapley value that assigns, to characteristic function games, a “partition function”outcome is broadly established and accepted, but elaborations to encompass games with externalities (represented by partition functions) are not. Here, I show t...