In markets, in which exchange requires costly search for trading partners, intermediaries can help to reduce the trading frictions. This intuition is modelled in a framework with heterogeneous agents, who have the chocie between intermediated exchange and search accompanied by some bargaining...

In the prisoners' dilemma game, the only evolutionary stable strategy is defection, even though nutual cooperation yields a higher payoff. Building on a paper by Robson (1990), we introduce mutants who have the ability to send a (costly) signal, i.e., the "secret handshake," before each round of...

This paper argues that, to be forward-looking in a logically consistent sense, a decision maker must take account of his overall well-being, not just his instantaneous utility, in all future periods. However, such a decision-maker is necessarily time inconsistent. The paper explores the...

We examine the consequences of vote buying, assuming this practice were al- lowed and free of stigma. Two parties compete in a binary election and may purchase votes in a sequential bidding game via up-front binding payments and/or campaign promises (platforms) that are contingent upon the...

We examine the consequences of lobbying and vote buying, assuming this prac- tice were allowed and free of stigma. Two "lobbyists" compete for the votes of legislators by offering up-front payments to the legislators in exchange for their votes. We analyze how the lobbyists' budget constraints...

We examine the consequences of vote buying, assuming this practice were allowed and free of stigma. Two parties competing in a binary election may purchase votes in a sequential bidding game via up-front binding payments and/or campaign promises (platforms) that are contingent upon the outcome...

Can direct democracy provisions improve welfare over pure representative democracy? This paper studies how such provisions affect politicians’ incentives and selection. While direct democracy allows citizens to correct politicians’ mistakes, it also reduces the incentives of elected...

We study monopoly and duopoly pricing in a two-sided market with dispersed information about users’ preferences. First, we show how the dispersion of information introduces idiosyncratic uncertainty about participation rates and how the latter shapes the elasticity of the demands and thereby...

We study the optimal dynamics of incentives for a manager whose ability to generate cash ows changes stochastically with time and is his private information. We show that, in general, the power of incentives (or "pay for performance") may either increase or decrease with tenure. However, risk...

We study centralized many-to-many matching in markets where agents have private information about (vertical) characteristics that determine match values. Our analysis reveals how matching patterns reflect cross-subsidization between sides. Agents are endogenously partitioned into consumers and...