When matching mechanisms yield assignments that are not stable, offers unravel, and, eventually, participants abandon the match. This logic is thought to provide a reasonable explanation of why, empirically, the stable Deferred Acceptance (DA) mechanism persists where non-stable alternatives, such as Priority mechanisms, are abandoned. Theory, however, tells us that both Deferred Acceptance (DA...

We investigate the matching algorithm used by the German central clearinghouse for university admissions (ZVS) in medicine and related subjects. This mechanism consists of three admission procedures that are administered sequentially. While these procedures differ with respect to the criteria applied ( final grades from school, waiting time etc.), two of them make use of priority matching. In p...

It is well known that ex post e¢ cient mechanisms for the provision of indivisible public goods are not interim individually rational. However, the corresponding literature assumes that agents who veto a mechanism can enforce a situation in which the public good is never provided. This paper instead considers majority voting with uniform cost sharing as the relevant status quo. E¢ cient mechani...

We construct a fully specified extensive form game that captures competitive markets with adverse selection. In particular, it allows firms to offer any finite set of contracts, so that cross-subsidization is not ruled out. Moreover, firms can withdraw from the market after initial contract offers have been observed. We show that a subgame perfect equilibrium always exists and that, in fact, wh...

We consider the problem of regulating an economy with environmental pollution. We examine the distributional impact of the polluter-pays principle which requires that any agent compensates all other agents for the damages caused by his or her (pollution) emissions. With constant marginal damages we show that regulation via the polluter-pays principle leads to the unique welfare distribution tha...

We use game theory and experimental economics approaches to analyze the relationships between corporate culture and the persistent performance differences among seemingly similar enterprises. First, we show that competition leads to higher minimum effort levels in the minimum effort coordination game. This implies that, organizations with competitive institutional design are more likely to have...

Collective-action problems pervade all societies as well as ecological systems used by humans. Substantial evidence has accrued during the last several decades that human actors are able to solve some (but definitely not all) collective-action problems on their own without external rules and enforcement imposed from the outside. In this article, I review some of the structural variables that ha...

We use laboratory experiments to test for one of the foundations of the rational voter paradigm – that voters respond to probabilities of being pivotal. We exploit a setup that entails stark theoretical effects of information concerning the preference distribution (as revealed through polls) on costly participation decisions. The data reveal several insights. First, voting propensity increases ...

We report on an experiment investigating whether the Hayak Hypothesis (Smith, 1982) extends to the long run setting. We consider two environments; one with a common production technology having a U-shaped long run average cost curve and a single competitive equilibrium, and another with a common constant returns to scale technology having a constant long run average cost curve and multiple comp...

This paper studies efficient partnership dissolution with ex post participation constraints in a setting with interdependent valuations. We derive a sufficient condition that ensures the existence of an efficient dissolution mechanism that satisfies Bayesian incentive compatibility, ex post budget balancedness, and ex post individual rationality. For equal-share partnerships, we show that our s...