Costless pre-play communication has been found to effectively facilitate coordination and enhance efficiency in games with Pareto-ranked equilibria. We report an experiment in which two groups compete in a weakest-link contest by expending costly efforts. Allowing intra-group communication leads...

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...

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...

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...

A minimal requirement on allocative efficiency in the social sciences is Pareto optimality. In this paper, we identify a close structural connection between Pareto optimality and perfection that has various algorithmic consequences for coalition formation. Based on this insight, we formulate the...

This paper aspires to fill a conspicuous gap in the literature regarding learning in games—the absence of empirical verification of learning rules involving pattern recognition. Weighted fictitious play is extended to detect two-period patterns in opponentsʼ behavior and to comply with the...

The preference between public and private negotiations for a buyer who sequentially visits two sellers is examined. It is shown that the buyer (weakly) prefers private negotiations so as to create strategic uncertainty about the trade history. With substitute goods, such uncertainty is valuable...

Playersʼ beliefs may be incompatible, in the sense that player i can assign probability 1 to an event E to which player j assigns probability 0. One way to block incompatibility is to assume a common prior. We consider here a different approach: we require playersʼ beliefs to be conservative,...

We analyze the problem of aggregating judgments over multiple issues from the perspective of whether aggregate judgments manage to efficiently use all voters' private information. While new in judgment aggregation theory, this perspective is familiar in a different body of literature about...