We define rationality and equilibrium when states specify agents’ actions and agents have arbitrary partitions over these states. Although some suggest that this natural modeling step leads to paradox, we show that Bayesian equilibrium is well defined and puzzles can be circumvented. The main problem arises when player j’s partition informs j of i’s move and i knows j’s strategy. Then i’s infer...

We examine self-control problems — modeled as time-inconsistent, presentbiased preferences—in a model where a person must do an activity exactly once. We emphasize two distinctions: Do activities involve immediate costs or immediate rewards, and are people sophisticated or naive about future self-control problems? Naive people procrastinate immediate-cost activities and preproperate—do too soon...

Motivated by the peace process in Israel I define a peace-making game by positive aggregate externalities and strategic complements and provide a characterization of equilibria without uncertainty. I argue that under the realistic scenario two pure equilibria exists involving either full peace-making efforts or no at all by both parties. I show that under Knightian uncertainty, that is uncertai...

This paper studies the core of combined games, obtained by summing two coalitional games. It is shown that the set of balanced transferable utility games can be partitioned into equivalence classes of component games to determine whether the core of the combined game coincides with the sum of the cores of its components. On the other hand, for non-balanced games, the binary relation associating...

We associate to any pure exchange economy a game with only two players, regardless of the number of consumers. In this twoplayer game, each player represents a different role of the society, formed by all the individuals in the economy. Player 1 selects feasible allocations trying to make Pareto improvements. Player 2 chooses an alternative from the wider range of allocations that are feasible ...

I study the payoff orders of bimatrix games classifying them into pure mutual interest, pure conflict and mixed motive games. These notions, informally introduced by [13] Schelling (1960), are then used to explore experimentally some regularities of perception of strategic interaction in 2x2 games with incomplete information about the opponent’s payoff matrix. Using data from [10] Oechssler/Sch...

We study top trading cycles in a two-sided matching environment (Abdulkadiroglu and Sonmez (2003)) under the assumption that individuals’ preferences and objects’ priorities are drawn iid uniformly. We show that the number of individuals/objects assigned at each round follows a simple Markov chain and we explicitly derive the transition probabilities. This Markov property is used to shed light ...

In this paper, we analyze coordination of macroeconomic stabilization policies within the EMU by focusing, in a dynamic set-up, on asymmetries, externalities, and the existence of a multi-country context. We study how coalitions among fiscal and monetary authorities are formed and what are their effects on the stabilization of output and price. In particular, our attention is directed to study ...

We analyze how the entry of less informed participants in a market for a risky asset affects the volatility of the price of the asset. In an endogenous participation model, we show that in equilibrium the new market entrants are less informed than the rest of the participants. We study how volatility depends on market participation and on the level of information of the participants. The condit...

We propose a model of posted prices in networks. The model maps traditional concepts of market power, competition and double marginalization into networks, allowing for the study of pricing in complex structures of intermediation, such as supply chains, transportation and communication networks and financial brokerage. We provide a complete characterization of equilibrium prices. Our experiment...