In this paper I consider a monopolistic screening model with continuum of types when the type set is a disconnected subset of the real line. I prove that the product line remains connected provided that the gap in the type space is sufficiently small. I also use the results to show that the...

In this paper I propose a model where social skills of a manager signal the workers that their e¤ort is productive. In this model …rms with a high productivity of e¤ort hire a socially skilled manager and pay higher wages, and workers hired by these …rms exert higher e¤ort. In a broader...

In this paper I consider a model of coexisting moral hazard and adverse selection, similar to one considered by Guesnerie, Picard, and Rey (1989). I provide an explicit solution for the optimal incentive scheme in the case, when the effort is observed with a normally distributed error. The main...

no abstract

Two kinds of theories of boundedly rational behavior are possible. Static theories focus on stationary behavior and do not include any explicit mechanism for temporal change. Dynamic theories, on the other hand, explicitly model the fine-grain adjustments made by the subjects in response to...

In this paper I consider the e¤ects of migration on the spread and the speed of the propagation of new conventions, technologies, etc. I show that the speed of the propagation increases with the openness of the economy. The application of the model to the equilibrium selection in 2 £ 2...

Two kinds of theories of the boundedly rational behavior are possible. Static theories focus on stationary behavior and do not include any explicit mechanism for temporal change. Dynamic theories, on the other hand, explicitly model the fine-grain adjustments made by the subjects in response to...

We consider a general agency model with coexisting hidden action and hidden information. We prove that, with minor technical qualifications, independence of the production technology from the consumer type is necessary and sufficient for welfare irrelevance of hidden action. Our result clarifies...

The use of bounded rationality in explaining economic phenomena has attracted growing attention. In spite of this, there is still considerable disagreement regarding the meaning of bounded rationality. Basov (2005) argues that when modeling boundedly rational behaviour it is desirable to start...

In this paper I revisit the Mussa and Rosen (1978) model. However, unlike Mussa and Rosen, I assume that there is a positive mass of the consumers of the highest possible type. I call them snobs. I prove that snobs consumers are served efficiently and the product line decreases in the mass of...