We look at the basic applications of cooperative game theory to economic situations. These include bargaining and cooperative equilibria, especially as the number of players increases without bound. The core and the Shapley value are the fundamental tools for these applications. We consider the...

Die beiden zentralen Ursachen der Euro-Krise liegen in einem fehlenden Ausgleichsmechanismus zur Absorption asymmetrischer Schocks und in immanenten Fehlanreizen (moral hazard) infolge externer Kosten eines systemischen Zusammenbruchs der Eurozone. Die bisherigen Antworten der Politik vermochten...

We develop the idea of using mean-variance preferences for the analysis of the first-price, all-pay auction. On the bidding side, we characterise the optimal strategy in symmetric all-pay auctions under mean-variance preferences for general distributions of valuations and any number of bidders....

Although firms devote a great deal of resources to promoting high ethical standards, little is known about how deceptive information transmission affects behavior in these environments. We find evidence for ripple effects of deceptive reporting—that victims of lies pay lies forward—and show...

We analyse the all-pay auction with incomplete information and variance-averse bidders. We characterise the symmetric equilibrium for general distributions of valuations and any number of bidders. Variance aversion is a sufficient assumption to predict that high-valuation bidders increase their...

How do firms motivate their employees to be productive? The conventional wisdom is that workers respond to monetary incentives - "Pay them more and they will work harder." However, a large and growing body of empirical evidence from laboratory and field experiments, surveys, and observational...

One feature of legislative bargaining in naturally occurring settings is that the distribution of seats or voting weights often does not accurately reflect bargaining power. Game-theoretic predictions about payoffs and coalition formation are insensitive to nominal differences in vote...

In river systems, costly upstream pollution abatement creates downstream welfare gains. Absent adequate agreement on how to share the gains, upstream regions lack incentives to reduce pollution levels. We develop a model that makes explicit the impact of water quality on production benefits and...