The extensive form game we study has multiple perfect equilibria, but it has a unique limiting logit equilibrium (QRE) and a unique level-k prediction as k approaches infinity. The convergence paths of QRE and level-k are different, but they converge to the same limit point. We analyze whether...

We study the evolution of preferences via payoff monotonic dynamics in strategic environments with and without complete information. It is shown that, with complete information and subgroup matching, empirically plausible interdependent preference relations may entail the local instability of...

This paper studies the relevance of equilibrium and nonequilibrium explanations of behavior, with respects to equilibrium refinement, as players gain experience. We investigate this experimentally using an incomplete information sequential move game with heterogeneous preferences and multiple...

We study information acquisition in a framework characterized by strategic complementarity or substitutability. Agents’ actions are based on costly public and private signals, the precisions of which are set by a policy maker and by private agents, respectively. The policy maker – acting as...

This paper studies the relevance of equilibrium and nonequilibrium explanations of behavior, with respects to equilibrium refinement, as players gain experience. We investigate this experimentally using an incomplete information sequential move game with heterogeneous preferences and multiple...

We consider a model consisting of a monopolistic firm producing a certain good with pollution. This firm can adopt a cleaner technology within a finite time by incurring an investment cost decreasing exponentially with the adoption date. At each period of time, the firm is regulated by an...

The paper is the first to derive and analyse theoretically the equilibrium properties of 'revenue neutral auctions', in the context of tradable pollution rights. By 'revenue neutrality' we mean that the objective of the agency distributing the rights is not to maximize earnings from the auction...

The paper is the first to derive and analyse theoretically the equilibrium properties of 'revenue neutral auctions', in the context of tradable pollution rights. By 'revenue neutrality' we mean that the objective of the agency distributing the rights is not to maximize earnings from the auction...

This paper investigates the role of endogenous timing of decisions on coordination under asymmetric information. In the equilibrium of a global coordination game, where players choose the timing of their decision, a player who has sufficiently high beliefs about the state of the economy...

Information regarding economic fundamentals is widely dispersed in society, is only imperfectly aggregated through prices or other indicators of aggregate activity, and can not be centralized by the government or any other institution. In this paper we seek to identify policies that can improve...