Models of choice where agents see others as less sophisticated than themselves have significantly different, sometimes more accurate, predictions in games than does Nash equilibrium. When it comes to mechanism design, however, they turn out to have surprisingly similar implications. This paper...

Incorporating bounded rationality into the classic consumer theory setting, we study the testable implications of a consumer who may have trouble consistently assessing her subjective tastes. Our model of E-Rationalizability, which bounds the consumer's misperception of her marginal rates of...

A decision maker may not perfectly maximize her preference over the feasible set. She may feel it is good enough to maximize her preference over a sufficiently large consideration set; or just require that her choice is sufficiently well-ranked (e.g., in the top quintile of options); or even...

The set of fair (i.e. envy free and efficient) allocation rules may be empty in wellbehaved pure exchange economies if the agents are asymmetrically informed at the time of contracting. In addition, there may exist efficient allocation rules such that every agent envies another.

I prove that the Nash bargaining solution is the only solution to satisfy ‘Disagreement Point Convexity’ and ‘Midpoint Domination’. I explain how this improves previous results obtained by Chun (1990) and by Dagan et al. (2002).

I adapt a reduction process introduced by Serrano and Volij (1998) so that the reduced games of convex-valued games are convex-valued. I use the corresponding consistency property and its converse to axiomatize the inner core for games that are convex-valued, non-level and smooth.

Our concern is the extension of the theory of the Shapley value to problems involving externalities. Using the standard axiom systems behind the Shapley value for an arbitrary exogenous coalition structure leads to the identification of bounds on players’ payoffs around an...

The type-agent core is a new solution concept for exchange economies with asymmetric information. It coincides with the set of equilibrium outcomes of a simple competitive screening game. Uninformed intermediaries help the agents to cooperate in an attempt to make some profit. The paper extends...

Most contributions in axiomatic bargaining are phrased in the space of utilities. This comes in sharp contrast with standards in most other branches of economic theory. The present paper shows how Nash's original axiomatic system can be rephrased in a natural class of economic environments with...

We first observe that two of Maskin's results do not extend beyond three players: we construct a four-player partition function with nonpositive externalities whose unique solution is inefficient, as well as a four-player characteristic function that has a unique efficient solution for each...