This paper demonstrates that cooperation in international environmental negotiations can be explained by preferences for equity. Within a N-country prisoner's dilemma in which agents can either cooperate or defect, in addition to the standard non-cooperative equilibrium, cooperation of a large...

Common wisdom holds that the introduction of a non-binding minimum wage is irrelevant for actual wages and employment. Empirical and experimental research, however, has shown that the introduction of a minimum wage can raise even those wages that were already above the new minimum wage. In this...

We study economies in which agents face Knightian uncertainty about state prices. Knightian uncertainty leads naturally to nonlinear expectations. We introduce a corresponding equilibrium concept with sublinear prices and prove that equilibria exist under weak conditions. In general, such...

Behavioral implementation studies implementation when agents' choices need not be rational. All existing papers of this literature, however, fail to handle a large class of choice behaviors because they rely on a well-known condition called Unanimity. This condition says, roughly speaking, that...

This paper provides first and second-order approximation methods for the solution of nonlinear dynamic stochastic models in which the exogenous state variables follow conditionally-linear stochastic processes displaying time-varying risk. The first-order approximation is consistent with a...