This paper studies disclosure dynamics and its implications for stock returns. Because disclosure is costly, the firm may withhold information for some time even when information is favorable. In equilibrium, the firm adopts a regular time-pattern of disclosure. Breaking this regularity, by failing to issue a disclosure when expected, leads to a sharp drop in the stock price and to a period of ...

This paper shows that the efficiency of relational contracting can be increased by reducing the public information through a novel intertemporalgarbling process of signals. A distinctive and essential feature of our intertemporalgarbling process is that past outputs have enduring effects on future signals. This process reduces the principal’s maximal reneging temptation by linking together the ...

Many separable dynamic incentive problems have primal recursive formulations in which utility promises serve as state variables. We associate families of dual recursive problems with these by selectively dualizing constraints. We make transparent the connections between recursive primal and dual approaches, relate value iteration under each and give conditions for such value iteration to be con...

This paper and its companion, Dutta-Siconolfi (2016a) proves a First Welfare Theorem for Games. It shows that infinite horizon asynchronous dynamic games with voluntary one period ahead transfers have a unique equilibrium that coincides with the Utilitarian Pareto Optimum and hence can be computed from a (simpler) programming problem (rather than as a fixed point). The only way that multiplicit...

This paper extends Lee and Sabourian [14] and examines repeated implementation of a social choice function in a general incomplete information environment where agents are in…nitely-lived and their preferences are determined stochastically in each period. Our main result establishes how any e¢ cient social choice function can be repeatedly implemented in Bayesian Nash equilibrium. Neither incen...

I study a bilateral bargaining game in which the size of the surplus follows a stochastic process and in which players might be optimistic about their bargaining power. Following Yildiz (2003), I model optimism by assuming that players have different beliefs about the recognition process. I show that the unique subgame perfect equilibrium of this game might involve inefficient delays. I also sh...

We show the existence of an upper bound for the number of blocks required to get from one imputation to another provided that accessibility holds. The bound depends only on the number of players in the TU game considered. For the class of games with non-empty cores this means that the core can be reached via a bounded sequence of blocks. JEL Classification Numbers: C71, C73, C61.

Successes of law enforcement in apprehending offenders are often publicized events. Such events have been found to result in temporary reductions in offending, or “residual deterrence”. We provide a theory of residual deterrence which accounts for the incentives of both enforcement officials and potential offenders. Our theory rests on the costs of reallocating enforcement resources. In light o...

We provide several generalizations of Mailath’s (1987) result that in games of asymmetric information with a continuum of types incentive compatibility plus separation implies differentiability of the informed agent’s strategy. The new results extend the theory to classic models in finance such as Leland and Pyle (1977), Glosten (1989), and DeMarzo and Duffie (1999), that were not previously co...

This paper provides a characterization of the set of dynamic models in which symmetric duopolists have incentives to raise a common cost. The advantage of the dynamic analysis over existing static models is that it extends the conditions (restrictive in static models) under which symmetric cost raising is profitable. The model is illustrated by standard examples from industrial organization: qu...