We offer a model to explain why groups of people sometimes converge upon poor decisions and are prone to fads, even though they can discuss the outcomes of their choices. Models of informational herding or cascades have examined how rational individuals learn by observing predecessors' actions,...

We develop an axiomatic foundation for the classical problem of paying workers in settings where their actions are not observed by the employer. The latter only observes the distribution of ability and demands fairness. First, we uniquely characterize workers’ expected pay thanks to a set of...

The paper develops a version of Pontryagin's maximum principle for optimal control problems with monotonicity constraints on control variables. Whereas the literature handles such constraints by imposing an assumption of piecewise smoothness on the control variable and treating the slope of this...