In repeated normal-form games, simple penal codes (Abreu 1986, 1988) permit an elegant characterization of the set of subgame-perfect outcomes. We show that the logic of simple penal codes fails in repeated extensive-form games. We provide two examples illustrating that a subgame-perfect outcome...

We introduce strategic waiting in a global game setting with irreversible investment. Players can wait in order to make a better informed decision. We allow for cohort effects and discuss when they arise endogenously in technology adoption problems with positive contemporaneous network effects....

This Paper characterises the unique Markov equilibrium in the sequential move, finite horizon pricing duopoly with discounting. Simple, short cycles repeat until the last two periods. For discount factors above 0.75488, there are three-period reaction function cycles and below 0.75488,...

This paper studies how constraints on the timing of actions affect equilibrium in intertemporal coordination problems. We show that while the possibility of waiting longer for others'’ actions helps agents to coordinate in the good equilibrium, the option of delaying one’s' actions harms...

We analyze incentives to develop entrepreneurial ideas for venture capitalists (VCs) and incumbent firms. If VCs are sufficiently better at judging an idea's value and if it is sufficiently more costly to patent low than high value ideas, VCs acquire valuable ideas, develop them beyond the level...

Historical records show that the Sicilian mafia initially developed to protect land from predatory attacks, at a time when publicly provided security was scarce and banditry widespread. Using a common-agency model, the Paper shows that: (i) it is optimal for each landowner to voluntarily buy...

A monetary union is modelled as a technology that makes surprise devaluations impossible but requires voluntarily participating countries to follow the same monetary policy. It is shown that for low discount factors and sufficiently correlated shocks welfare in the union is higher than that...

We analyse the labour supply of 16-year-old British children together with the cash transfers made to them by their parents. We develop a theoretical model with an altruistic parent and a selfish child, which serves as a basis for the empirical specification in which labour supply and transfers...