This paper presents a model in which players interact via the formation of costly links and the benefits of bilateral interactions are determined by a coordination game. A novel contribution of this paper is that the fraction of the cost borne by each player involved in a bilateral link is not...

We study the effect of strengthening CACs in a debt rollover model of a sovereign debt crisis. Conditional on default, there are multiple equilibria: the impact of strengthening CACs depends critically on the prevailing equilibrium. For a subset of equilibria, (i) given a fixed number of...

This paper presents a model of network formation with costly links. We endogenize the amount of cost born by each player involved in a bilateral link by considering that these shares result from bargaining. We analyze this feature in a context of coordination games. We show that, if the cost of...

In a model with both issues of sovereign debtor moral hazard and creditor coordination under incomplete information, we show that the resulting conflict between ex ante and interim efficiency limits the welfare impact of strengthening CACs. Conditional on default, we show that an interim...

Does improving creditor coordination by strengthening CACs lead to efficiency gains in the functioning of sovereign bond markets? We address this question in a model featuring both debtor moral hazard and creditor coordination under incomplete information. Conditional on default, we characterize...

Asymmetric information can help achieve an efficient equilibrium in repeated coordination games. If there is a small probability that one player can play only one of a continuum of moves, that player can pretend to be of the constrained type and other players will coordinate with him. This hurts...

We study decentralized task coordination. Tasks are of varying complexity and agents asymmetric: agents capable of completing high-level tasks may also take on tasks originally contracted by lower-level agents, facilitating system-wide cost reductions. We suggest a family of decentralized...

Social norms in ultimatum's game establish that extremely unequal offers lead to an inevitable failure. However, even under the obedience of the norm and far from Nash Equilibrium, negotiated wealth is traditionally favorable for proposers when information given is temporally incomplete. In our...

We study experimentally a two-stage compensation mechanism for promoting cooperation in prisoner's dilemma games. In stage 1, players simultaneously choose binding non-negative amounts to pay their counterparts for cooperating in a given prisoner's dilemma game, and then play the prisoner's...

This study observes that no group strategy-proof mechanism satisfies even a fairly weak notion of stability in a school choice setting. In response to this result, we introduce two monotonicity axioms, which we call top-dropping monotonicity and extension monotonicity, as alternatives to group...