We study a communication game of common interest in which the sender observes one of infinite types and sends one of finite messages which is interpreted by the receiver. In equilibrium there is no full separation but types are clustered into contiguous cells. We give a full characterization of...

We study the development of a social norm of trust and reciprocity among a group of strangers via the “contagious strategy” as defined in Kandori (1992). Over an infinite horizon, the players anonymously and randomly meet each other and play a binary trust game. In order to provide the...

This paper studies the evolution of peoplesʼ models of how other people think – their theories of mind. This is formalized within the level-k model, which postulates a hierarchy of types, such that type k plays a k times iterated best response to the uniform distribution. It is found that,...

An experiment is designed to provide a snapshot of the strategies used by players in a repeated price competition game with a random continuation rule. One hundred pairs of subjects played the game over the Internet, with subjects having a few days to make their decisions in each round....

We experimentally assess the predictive power of two equilibrium selection principles for binary N-player entry games with strategic complementarities. In static entry games, we test the theory of global games which posits that players play games of complete information as if they were playing a...

In a multi-stage contest known as a two-player race, players display two fundamental behaviors: (1) the laggard will make a last stand in order to avoid the cost of losing; and (2) the player who is ahead will defend his lead if it is threatened. Last stand behavior, in particular, contrasts...

We study multi-object auctions in the presence of post-auction trade opportunities among bidders who have either single- or multi-object demand. We focus on two formats: Vickrey auctions where package bidding is possible and simultaneous second-price auctions. We show that, under...

A buyer procures a network to span a given set of nodes; each seller bids to supply certain edges, then the buyer purchases a minimal cost spanning tree. An efficient tree is constructed in any equilibrium of the Bertrand game.

We consider a market for indivisible items with m buyers and m sellers. Traders privately know their values/costs, which are statistically dependent. Two mechanisms are considered. The buyer's bid double auction collects bids and asks from traders and determines the allocation by selecting a...

We consider second-price common-value auctions with an increasing number of bidders. We define a strategy of bidder i to be (ex-post, weakly) asymptotically dominated if there is another strategy for i that does, in the limit, as well against any sequence of strategies of iʼs opponents, and...