We study a continuous and balanced mechanism that is capable of implementing in Nash equilibrium all the Pareto-efficient individually rational allocations for an economy with public goods. The Government chooses a set of weights directly related to the Lindahl prices corresponding to the Pareto-efficient allocation it wants to implement. The mechanism then guarantees that initial endowments ar...

We study the problem of allocating heterogeneous indivisible tasks in a multi-object-demand model (i.e., each agent can be assigned multiple objects) where monetary transfers are allowed. Agents’ costs for performing tasks are their private information and depend on what other tasks they are obtained with. First, we show that when costs are unrestricted or superadditive, then there is no envy-f...

We consider the role of the common prior for robust implementation in an environment with interdependent values. Specifically, we investigate a model of public good provision which allows for negative and positive informational externalities. In the corresponding direct mechanism, the agents’ reporting strategies are strategic complements with negative informational externalities and strategic ...

Consider an exchange mechanism which accepts “diversified” offers of various commodities and redistributes everything it receives. We impose certain conditions of fairness and convenience on such a mechanism and show that it admits unique prices, which equalize the value of offers and returns for each individual. We next define the complexity of a mechanism in terms of certain integers τij , πi...

We conduct an experimental study on behavior and cognition in prisoner’s dilemmas with and without role-switching from the perspective of inductive game theory (IGT). It is basic for our study that subjects have no prior knowledge about any payoffs, even their own; they may learn them by repeated play. Without role-switching, many subjects learned relevant payoffs successfully and played a domi...

Power is a core concept in the analysis and design of organisations. In this paper we consider positional power in hierarchies. One of the problems with the extant literature on positional power in hierarchies is that it is mainly restricted to the analysis of power in terms of the bare positions of the actors. While such an analysis informs us about the authority structure within an organisati...

We compare behavior in modified dictators game during the “Great Recession” to behavior in otherwise identical experiments conducted amidst the economic boom that preceded it. The experiments capture both differences in indexical selfishness and differences in equalityefficiency tradeoffs. Subjects exposed to the recession exhibit higher levels of indexical selfishness and greater emphasis on e...

Basel II changes risk management in banks strongly. Internal rating procedures would lead one to expect that banks are changing over to active risk control. But, if risk management is no longer a simple “game against nature”, if all agents involved are active players then a shift from a non-strategic model setting (measuring event risk stochastically) to a more general strategic model setting (...

Trusting beliefs — a players’ subjective probability of not being cheated — can be exploited. However, if a trustful player is cheated too often, she should change her belief and start trusting less, until her beliefs are correct. For this reason we model trust as an equilibrium phenomenon. Players receive an offer to transact and choose whether or not to cheat and steal the entire surplus. Che...