The endowment and attachment effect are empirically well-documented in bilateral trade situations. Yet, the theoretical literature has so far failed to formally identify these effects. We ftll this gap by introducing expectations-based loss aversion, which can explain both effects, into the...

Ever since Sen crystallized the logical conflict between the welfaristic value of the Pareto principle and the nonwelfaristic value of individual libertarian rights into what he christened the impossibility of a Paretian liberal , there have been many attempts in social choice theory to...

We develop a dynamic model in which a group collectively bargains with an external party. At each date the group makes an offer to the external party (the 'agent') in exchange for a concession. Group members hold heterogeneous preferences over agreements and are uncertain about the agent's...

We study intermediaries who seek to maximize gains from trade in bilateral negotiations. Intermediaries are players: they cannot commit to act against their objective function and deny, in some cases, trade they believe to be beneficial. This impairs their ability to assist the parties relative...

Goods and services---public housing, medical appointments, schools---are often allocated to individuals who rank them similarly but differ in their preference intensities. We characterize optimal allocation rules when individual preferences are known and when they are not. Several insights...

Recent healthcare reforms have sought to increase efficiency by introducing managed care (MC) while respecting consumer preferences by admitting choice between MC and conventional care. This article proposes an institutional change designed to let German consumers choose between the two settings...

We describe a simple 2-stage mechanism whereby for two bargainers, a Buyer and a Seller, it is a weakly dominant strategy to report their reservation prices in the 1st stage. If the Buyer reports a higher price than the Seller, then the referee announces that there is the possibility for trade,...

This paper studies the application of the notion of secure implementation (Cason, Saijo, Sj¨ostr¨om, and Yamato, 2006; Saijo, Sj¨ostr¨om, and Yamato, 2007) to the problem of allocating indivisible objects with monetary transfers. We propose a new domain-richness condition, termed as minimal...

This paper experimentally analyzes the effects if signatories to an international environmental agreement (IEA) apply different voting schemes to determine the terms of the agreement. To this end, unanimity, qualified majority voting, and simple majority voting are compared with respect to the...

A new feature pertaining to proposer's ability to implement offers is introduced in the extensive form bargaining mechanism studied in Chatterjee et. al. (1993). This mechanism is used to analyze two classes of coalitional games with transferable utility. One class is that of strictly...