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...

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 show that in markets with asymmetric information, even if there is full agreement on the choice of optimal information quality, entrusting the choice of (unverifiable) public information quality to traders who benefit from such information leads to inefficiencies. However, delegation 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....

This note analyzes a two-player all-pay auction with incomplete information. More precisely, one bidder is uncertain about the size of the initial advantage of his rival modeled as a head start in the auction.

We prove a folk theorem for stochastic games with private, almost-perfect monitoring and observable states when the limit set of feasible and individually rational payoffs is independent of the state. This asymptotic state independence holds, for example, for irreducible stochastic games. Our...

We analyze a toy class of two-player repeated games with two-sided incomplete information. In our model, two players are facing independent decision problems and each of them holds information that is potentially valuable to the other player. We study to what extent, and how, information can be...

In an individual experimentation problem a decision maker learns only from his own experience. It is well known that an optimal experimentation strategy for such problems sometimes results in the best alternative being dropped altogether, which is the so-called “Rothschild effect.” Many...