We analyze a sequential decision model with one-sided commitment in which decision makers are allowed to choose the time of acting (exercising a risky investment option A) or waiting. We characterize information cascade under endogenous ordering and show that with endogenous ordering, if the number of decision makers is large and decision makers are patient enough, at any fixed time, nearly all...

Economic activities, both on the macro and micro level, often entail wide-spread externalities. This in turn leads to disputes regarding the compensation levels to the various parties affected. We propose a general, yet simple, method of deciding upon the distribution of the gains (costs) of cooperation in the presence of externalities. This method is shown to be the unique one satisfying sever...

This paper synthesizes recent advances in the theoretical and empirical literature on capital controls. We start by observing that international flows have both benefits costs, but some of these are not internalized individual actors thus constitute externalities. The has identified pecuniary externalities aggregate demand respectively contribute to financial instability recessions. These provi...

We describe the behaviour of a monopolist supplying a vertically di¤erentiated good with network externalities. Assuming a ...xed cost of quality improvements, we show that the presence of network externalities enhances the incentive to expand output associated with scale economies. Although the quality distortion operated by the monopolist increases with network externalities, the output expan...

We study potential games with continuous player sets, a class of games characterized by an externality symmetry condition arising naturally in models of network congestion. We offer a simple description of equilibria which are locally stable under a broad class of evolutionary dynamics, and prove that behavior converges to equilibrium from all initial conditions. We propose a subclass of potent...

This paper provides a framework for implementing and comparing several solution concepts for transferable utility cooperative games. We construct bidding mechanisms where players bid for the role of the proposer. The mechanisms differ in the power awarded to the proposer. The Shapley, consensus and equal surplus values are implemented in subgame perfect equilibrium outcomes as power shifts away...

For the game of complete information with multiple principals and multiple common agents discussed by Prat and Rustichini (2003), we construct a general set of equilibrium transfers which implement any efficient outcome as a weakly truthful equilibrium, and the subset of such equilibria that are Pareto optimal for the principals. We provide conditions under which the general set completely char...

How should a group of people decide to allocate a task that has to be done but is not adequately rewarded? This paper finds an optimal mechanism for the private provision of a public service in an environment without monetary transfers. All members of the group have the same cost of providing the service, but some individuals are better suited for the task than others. The optimal mechanism is ...

Our concern is the extension of the theory of the Shapley value to problems involving externalities. Using the standard axiom systems behind the Shapley value for an arbitrary exogenous coalition structure leads to the identification of bounds on players’ payoffs around an “externality-free” value. In endogenizing the coalition structure, we analyze a two-stage process of coalition formation in...