We study bargaining over contingent contracts in problems where private information becomes public or verifiable when the time comes to implement agreement. suggest a simple, two-stage game that incorporates important aspects of bargaining. characterize equilibria which parties always reach agreement, and their limits as frictions vanish. Under mild regularity conditions, we show all interim-ef...

We study subgame-perfect implementation (SPI) mechanisms that have been proposed as a solution to incomplete contracting problems. show these mechanisms, which are based on off-equilibrium arbitration clauses impose large fines for lying and the inappropriate use of arbitration, severe behavioral constraints because induce retaliation against legitimate uses arbitration. Incorporating reciproci...

A principal seeks to persuade an agent accept offer of uncertain value before a deadline expires. The can generate information, but exerts no control over exogenous outside information. combined effect the and information creates incentives for keep uncertainty high in first periods so as close deadline. We characterize equilibrium, compare it single-player decision problem which is agent’s onl...

Our experiments investigate the extent to which traders learn from price, differentiating between situations where orders are submitted before versus after price has realized. In simultaneous markets with bids that conditional on neglect information conveyed by hypothetical value of price. sequential is known prior bid submission, react an roughly consistent benchmark theory. The difference’s r...

We characterize the revenue-maximizing information structure in second-price auction. The seller faces a trade-off: more improves efficiency of allocation but creates higher rents for bidders. disclosure policy that maximizes revenue is to fully reveal low values (where competition high) pool high low). size determined by critical quantile independent distribution and only dependent on number d...

We examine the introduction of automatic air pollution monitoring to counter suspected tampering at local level, a central feature China’s “war on pollution.” Exploiting 654 regression discontinuity designs based city-level variation in day that was automated, we find an immediate and lasting increase 35 percent reported PM 10 concentrations post-automation. Moreover, automation’s increased onl...

In this paper, I analyze the role of equity and debt linked contracts in a monopoly setting. I show that the equity contract dominates the debt linked contracts because it attracts higher ability entrepreneurs and provides more profit to the monopolist. I also show that the social welfare that results from the equity contract exceeds those derived from debt financial instruments. ∗I thank Josh ...

Moral behavior is more prevalent when individuals cannot easily distort their beliefs self-servingly. Do seek to limit or enable ability beliefs? How do these choices affect behavior? Experiments with over 9,000 participants show preferences are heterogeneous—30 percent of prefer belief distortion, while 40 it, even if costly. A random assignment mechanism reveals that being assigned the prefer...

In liability lawsuits (e.g., patent infringement), a plaintiff demands compensation from defendant, and the parties often negotiate settlement to avoid costly trial. Liability insurance creates bargaining leverage for defendant in this negotiation. We study characteristics of monopoly equilibrium contracts settings where effect is substantial source value insurance. Our results show that under ...