We analyze a strategic trading model where an overconfident insider is required to publicly disclose his trades after the fact. We find the more confident insider is more concerned about the effect the initial trading has on the future.

A restricted-perceptions equilibrium exists in which risk-averse agents believe stock prices follow a random walk with a conditional variance that is self-fulfilling. When agents estimate risk, bubbles and crashes arise. These effects are stronger when agents allow for ARCH in excess returns.

When penalties for first-time offenders are restricted, it is typically optimal for the lawmaker to overdeter repeat offenders. First-time offenders are then deterred not only by the (restricted) fine for a first offense, but also by the prospect of a large fine for a subsequent offense. Now...

Testing for asymmetric information in insurance markets has become a very important issue in the empirical literature in the last years. We analyze the (private) accident insurance, which has not been analyzed before in the literature, but covers one of the most important risks faced by...

We provide extensions of the Bulow and Klemperer (1996) result when the seller has value for the object above the minimum value of the buyers. The result may fail. We show that the seller does better with more participation and some exclusion than the optimal exclusion of buyers of low value...

I show that bargaining impasse in Hörner and Vieille (2009) can be interpreted as the limit of bargaining delay: the maximal duration of the game increases unboundedly as the seller’s discount factor approaches the threshold level above which bargaining impasse occurs.

We establish the effort-maximizing rule of allocating heterogeneous prizes when contestants privately observe their effort efficiencies. With ex ante symmetric players and increasing virtual effort efficiency, an all pay auction maximizes the total expected effort.

We show that in a standard symmetric Cournot duopoly with unknown demand, the optimal information disclosure policy of an informed benevolent planner is to fully inform one of the duopolists and disclose no information to the other one. We discuss possible extensions of the result.

We characterize the second-best public-goods provision rule with an inequality-averse principal. Our main results show how the provision rule reacts to variations of an exogenous budget available for public-goods provision when the principal exhibits different levels of inequality aversion.

This study analyzes one-leader and multiple-follower Stackelberg games with demand uncertainty. We demonstrate that the weight on public information regarding a follower’s estimation of demand uncertainty determines the strategic relationship between the leader and each follower. When the...