We study repeated games with frequent actions and frequent imperfect public signals, where the signals are aggregates of many discrete events, such as sales or tasks. The high-frequency limit of the equilibrium set depends both on the probability law governing the discrete events and on how many...

This paper studies whether agents must agglomerate at a single location in a class of models of two-sided interaction. In these models there is an increasing returns effect that favors agglomeration, but also a crowding or market-impact effect that makes agents prefer to be in a market with...

In some experiments, rational players who understand the structure of the game could improve their payoff. The authors bound the size of the observed losses in several such experiments. To do this, they suppose that the observed play resembles an equilibrium because players learn about their...

This paper studies the way that word-of-mouth communication aggregates the information of individual agents. The authors find that the structure of the communication process determines whether all agents end up making identical choices, with less communication making this conformity more likely....

We consider the robustness of extensive form mechanisms to deviations from common knowledge about the state of nature, which we refer to as information perturbations. First, we show that even under arbitrarily small information perturbations the Moore-Repullo mechanism does not yield (even...

We develop a theory of moral behavior, individual and collective, based on a general model of identity in which people care about "who they are" and infer their own values from past choices. The model sheds light on many empirical puzzles inconsistent with earlier approaches. Identity...

This paper shows how the optimal financial structure of a firm complements incentive schemes to discipline managers, and how the securities' return streams determine the claimholders' incentives to intervene in management. The theory rationalizes (1) the multiplicity of securities, (2) the...

This paper analyzes the organization of the R&D activity in an incomplete contract framework. It provides theoretical foundations to understand how the allocation of property rights on innovations may affect both the frequency and the magnitude of these innovations; to rationalize commonly...

We analyze the value placed by rational agents on self-confidence, and the strategies employed in its pursuit. Confidence in one's abilities generally enhances motivation, making it a valuable asset for individuals with imperfect willpower. This demand for self-serving beliefs (which can also...