If communication involves some transactions cost to both sender and recipient, what policy ensures that correct messages - those with positive social surplus - get sent? Filters block messages that harm recipients but benefit senders by more than transactions costs. Taxes can block positive...

We analyze a college admissions game with asymmetric information between students and colleges. Students' preferences for colleges depend on the observable quality of the schools. In contrast, colleges' preferences for students depend on the latter's abilities, which are private information....

Recognizing spam as a pollution problem points to a market-based approach that could be more effective than prior approaches based on either technology or law. Combining insights from externality economics and information asymmetry, I argue that an imperfect market can create more value for...

This research introduces the sequential bargaining to the standard screening model by allowing the agent to propose new contracts with strategic delay after the rejection of the principal's offer. We have found that if the difference between the types of agent are sufficiently large, the...

We consider a matching model of the labour market where workers that differ in quality send signals to firms that are also vertically differentiated. Signals allow assortative matching in which the highest quality workers send the highest signals and are hired by the best firms. Matching is...

Some labor markets have recently developed formal signalling mechanisms, e.g. the signalling for interviews in the job market for new Ph.D. economists. We evaluate the effect of such mechanisms on two-sided matching markets by considering a game of incomplete information between firms and...

This paper presents the results of an experimental study of preemptive jump bidding in English auctions with a flexible reserve price. While one of the possible explanations for jump bidding is based on signaling arguments, the ability of the seller to adjust his decision to accept an offer...

This paper develops a model of takeover auctions with a two-step information acquisition process. It shows that the threat of extra information acquisition allows the existence of the signaling jump-bidding equilibrium even when the seller is able to change its reserve price on the basis of the...

Several labor markets, including the job market for new Ph.D. economists, have recently developed formal signaling mechanisms. We show that such mechanisms are harmful for some environments. While signals transmit previously unavailable information, they also facilitate information asymmetry...

We show that firms intermediating trade have incentives to overinvest in financial expertise, and that these investments can be destabilizing. Financial expertise in our model improves firms' ability to accurately estimate value when trading a security. It creates adverse selection, which under...