We study the implications of optimal dynamic contracts in private information environments for fluctuations in effort and employment across time and productivity states. To this end, we incorporate temporary layoffs and permanent separations as well as on-the-job effort variations into a dynamic...

While actual bargaining features many issues and decision making on the order in which issues are negotiated and resolved, the typical models of bargaining do not. Instead, they have either a single issue or many issues resolved in some fixed order, typically simultaneously. This paper shows...

In each stage of a repeated game with private monitoring, the players receive payoffs and privately observe signals which depend on the players' actions and the state of world. I show that, contrary to a widely held belief, such games admit a recursive structure. More precisely, I construct a...

We discuss a competitive (labor) market where firms face capacity constraints and individuals differ according to their productivity. Firms offer two-dimensional contracts like wage and task level. Then workers choose firms and contracts. Workers might be rationed if the number of applicants...

Two-stage game models of information acquisition in stochastic oligopolies require the assumption that firms observe the precision of information chosen by their competitors before determining quantities. This paper analyzes secret information acquisition as a one-stage game. Relative to the...

This paper describes optimal contracts in a dynamic costly state verification model with stochastic monitoring. An agent operates a risky project on behalf of a principal who can observe the project’s revenues at a cost. We show that an optimal contract exists such that, at any history, either...

We characterize the solution to a dynamic model of risk sharing under non-commitment when saving is possible. Savings can play two important roles. First savings can be used to smooth aggregate consumption across different periods. Second, when savings are observable, they can act as a...

<Para ID="Par1">This paper presents a model of social capital and social network formation. The key interaction within the model is that whom an individual chooses to become friends with affects the value (social capital) of the friendship. In the model, how a player searches for and then forms friendships...</para>

History-dependent strategies are often used to support cooperation in repeated game models. Using the indefinitely repeated common-pool resource assignment game and a perfect stranger experimental design, this paper reports novel evidence that players who have successfully used an...