This paper presents a model of choice based on imperfect memory and self-deception. I assume that people have preferences over their own attributes (e.g., skill, knowledge, or competence) and can manipulate their memories. The model provides a prior-dependent theory of regret aversion and allows...

We examine implications of a society's cultural emphasis on moral sentiments. Entrepreneurs and investors interact in a game that entails both adverse selection and moral hazard; entrepreneurs may attempt to breach their contracts and expropriate investors. An agent is born into a particular...

We study type spaces where a player's type at a state is a conditional probability on the space. We axiomatize these spaces using conditional belief operators, examining three additional axioms of increasing strength. First, introspection, which requires the agent to be unconditionally certain...

The set of all Bayesian–Nash equilibrium payoffs that the players can achieve by making conditional commitments at the interim stage of a Bayesian game coincides with the set of all feasible, incentive compatible and interim individually rational payoffs of the Bayesian game. Furthermore, the...

It has been suggested that players often produce simplified and/or misspecified mental representations of interactive decision problems (Kreps, 1990). We submit that the relational structure of players' preferences in a game induces cognitive complexity, and may be an important driver of such...

We analyze a simultaneous ascending auction with anonymous item prices, for two items that are substitutes. This popular format entails increased opportunities for coordination among bidders, since bids are observable and can be used as signaling. This has happened, e.g., in the Netherlands 3G...

In this paper, we analyze the cost allocation problem when a group of agents or nodes have to be connected to a source, and where the cost matrix describing the cost of connecting each pair of agents is not necessarily symmetric, thus extending the well-studied problem of minimum cost spanning...

Often an organization or government must allocate goods without collecting payment in return. This may pose a difficult problem either when agents receiving those goods have private information in regards to their values or needs. In this paper, we find an optimal mechanism to allocate goods...

We discuss the emergence of cooperation in repeated Trust Mini-Games played by finite automata. Contrary to a previous result obtained by Piccione and Rubinstein (1993), we first prove that this repeated game admits two Nash equilibria, a cooperative and a non-cooperative one. Second, we show...

Aumann (1995) showed that for games with perfect information common knowledge of substantive rationality implies backward induction. Substantive rationality is defined in epistemic terms, that is, in terms of knowledge. We show that when substantive rationality is defined in doxastic terms, that...