We show that a rational expectations equilibrium need not be incentive compatible, need not be implementable as a perfect Bayesian equilibrium and may not be fully Pareto optimal, unless the utility functions are state independent. A comparison of rational expectations equilibria with core...

We show that a rational expectations equilibrium need not be incentive compatible, need not be implementable as a perfect Bayesian equilibrium and may not be fully Pareto optimal, unless the utility functions are state independent. A comparison of rational expectations equilibria with core...

In the context of extensive form games, we are considering the relation between mixed and behavioural strategies. We look again at the famous Kuhn theorem and also discuss a result for games in which no path intersects any information set in more than one node. We apply the principle...

We show that a rational expectations equilibrium need not be incentive compatible, need not be implementable as a perfect Bayesian equilibrium and may not be fully Pareto optimal, unless the utility functions are state independent. A comparison of rational expectations equilibria with core...

Numerous, mainly empirical, studies of auditing behaviour have recently looked at the “reputation” of the auditor and the size of fees it attracts. Our model of the auditing market advances the study of the fundamental principles involved in determining behaviour in relation to the rewards...

In bargaining theory a usual assumption is either that of von Neumann-Morgenstern utility functions or that of continuous preferences. Recently we considered in Glycopantis a bargaining model which breaks away from this traditional treatment by employing lexicographic preferences of a...

The supply of information, particularly of bad news, in an agency relationship is a sensitive issue. We employ a game theory approach to investigate conflicts in the particular case of the doctor-patient relationship when information affects the emotions of patients. The doctor does not know the...

The purpose of this note is to discuss the envelope relationship between long run and short run cost functions. It compares the usually presented relationship with one of different form and implications, resulting from a simple production function and constant prices. It points out in particular...

The paper explains by means of two detailed examples that Nash Equilibria in zero-sum games can be obtained through the application of linear programming and maximin calculations. It also discusses, for the same purpose, the application of Kuhn-Tucker theory. In particular, with respect to the...