This paper studies the ability of an agent and a principal to achieve the first-best outcome when the agent invests in an asset that has greater value if owned by the principal than by the agent. When contracts can be renegotiated, a well-known danger is that the principal can holdup the agent,...

Market gardening has been increasing fast in Senegal. But farmers face high marketing risks: daily price fluctuations exceed an average 20% for some products, seasonality is strong, anticipation based on prices leads to cyclic movements. Farmers and market operators have found various forms of...

We examine how social preferences affect behavior and surplus in relational contracts. Experimental subjects participate in a contracting environment similar to Brown, Falk, and Fehr [Brown, M., Falk, A. & Fehr, E., “Relational Contracts and the Nature of Market Interactions, Econometrica, 72...

We characterize the outcomes of games when players may make binding offers of strategy contingent side payments before the game is played. This does not always lead to efficient outcomes, despite complete information and costless contracting. The characterizations are illustrated in a series of...

We study the effects of unequal representation in the interest-group system on the degree of information transmission between a lobbyist and a policymaker. Employing a dynamic cheap-talk model in which the lobbyist cares instrumentally about his reputation for truthtelling, we show that the...

This study is part of a continuing program of research into the performance of economic infrastructure industries, which was commenced by the Bureau of Industry Economics. It is the third Waterfront Benchmarking report in the cycle. The study builds on the two previous waterfront studies by...

Recent surveys in the United States and the Muslim world show widespread misinformation about the events of September 11, 2001. Using data from 9 predominantly Muslim countries, we study how such beliefs depend on exposure to news media and levels of education. Standard economic theory would...

In a pure-exchange economy involving one perishable consumption good and risk-averse consumers, the elasticity of a consumer’s Pareto-efficient consumption with respect to aggregate output equals the reciprocal of the ratio of the consumer’s coefficient of relative risk aversion to average...

A supplement to Economic Analysis (3rd Edition).

A dual representation of a technology, e.g., a cost function, may not contain all of the technological information, but it will contain all of the information about input vectors that would be chosen by a cost-minimizing firm. At least this much is clear for deterministic technologies. The main...