This paper examines an infinite-horizon bargaining model, incorporating two-sided incomplete information, uncertainty concerning the potential gains from trade, an illumination of interesting qualitative bargaining issues, and plausible equilibria. These features have powerful implications. A...

We examine an economy in which the cost of consuming some goods can be reduced by making commitments that reduce flexibility. We show that such consumption commitments can induce consumers with risk-neutral underlying utility functions to be risk averse over small variations in income, but...

This paper develops an explanation of why bargainers often terminate negotiations in disagreement in spite of positive expected gains from continued negotiations. The key to the analysis is a model that embeds bargaining activity within a market. Agents are continually faced with the choice...

This paper develops an approach to equilibrium selection in game theory based on studying the learning process through which equilibrium is achieved. The differential equations derived from models of interactive learning typically have stationary states that are not isolated. Instead, Nash...

We examine a market in which long-lived firms face a short-term incentive to exert low effort, but could earn higher profits if it were possible to commit to high effort. There are two types of firms, "inept" firms who can only exert low effort, and "competent" firms who have a choice between...

We examine an economy in which the cost of consuming some goods can be reduced by making commitments that reduce flexibility. We show that such consumption commitments can induce consumers with risk-neutral underlying utility functions to be risk averse over small variations in income, but...