We analyze credit market equilibrium when banks screen loan applicants. When banks have a convex cost function of screening, a pure strategy equilibrium exists where banks optimally set interest rates at the same level as their competitors. This result complements Broecker's (1990) analysis,...

We analyze credit market equilibrium when banks screen loan applicants. When banks have a convex cost function of screening, a pure strategy equilibrium exists where banks optimally set interest rates at the same level as their competitors. This result complements Broecker's (1990) analysis,...

This paper provides a framework for explicitly modeling the information gathering activities of potential entrants and analyzes how entry behavior is affected by these activities. We assume that information is acquired secretly and that firms face uncertainty about more than one variable. When...

Traditional economic wisdom says that free entry in a market will drive profits down to zero. This paper shows that profits may remain bounded away from zero when firms have to make a negligible small investment to learn the demand.

We formally incorporate the option to gather information into a game and thus endogenize the information structure. We ask whether models with exogenous information structures are robust with respect to this endogenization. Any Nash equilibrium of the game with information acquisition induces a...

We describe an experiment where buyers and sellers, endowed with heterogeneous deadlines, are randomly matched and attempt to reach agreement over the division of a fixed surplus. The theoretical models that provide the background for this experiment have been developed in recent papers by...

We consider a dynamic model where traders in each period are matched randomly into pairs who then bargain about the division of a fixed surplus. When agreement is reached the traders leave the market. Traders who do not come to an agreement return next period in which they will be matched again,...

This paper analyzes bargaining outcomes when agents do not have stationary time preferences (as represented by a constant discount factor) but are pressed by firm deadlines. We consider a dynamic model where traders with heterogeneous deadlines are matched randomly into pairs who then bargain...