This paper shows how competing firms can facilitate tacit collusion by making passive investments in rivals. In general, the incentives of firms to collude depend in a complex way on the whole set of partial cross ownership (PCO) in the industry. We show that when firms are identical, only...

The assumption that decision makers choose actions to maximize their preferences is a central tenet in economics. This assumption is often justied either formally or informally by appealing to evolutionary arguments. In contrast, we show that in almost every game and for almost every family of...

This paper develops a general methodology for characterizing the dynamic evolution of preferences in a wide class of strategic interactions. We give simple conditions characterizing the limiting distribution of preferences in general games, and apply our results to study the evolutionary...

This paper examines the incentive of unpaid programmers to contribute to open source software (OSS) projects in order to signal their talents. The analysis shows that if programmers contribute to OSS projects at all, then generically there are multiple equilibria. In these equilibria, an...

We study the design of profit maximizing single unit auctions under the assumption that the seller needs to incur costs to contact prospective bidders and inform them about the auction. With independent bidders’ types and possibly interdependent valuations, the seller’s problem can be...