If voters of different countries adhere to different and deeply rooted cultural norms, the country leaders may fi…nd it impossible to agree on efficient policies especially in hard times. The conformity constraint -political leaders unwillingness or impossibility to depart from these norms -...

We study how ineffciencies of market failure may be further amplified by political choices made by interest groups created in the inefficient market. We take an occupational choice framework, where agents are endowed heterogeneously with wealth and talent. In our model, market failure due to...

This paper applies mechanism design to con ict resolution. We determine when and how unmediated communication and mediation reduce the ex ante probability of con ict in a game with asymmetric information. Mediation improves upon unmediated communication when the intensity of con ict is high, or...