We extend a model of wasteful state aid in Dewatripont and Seabright (2006, Journal of the European Economic Association 4, 513-522) by a supranational controlling authority. The model combines moral hazard and adverse selection to show that politicians fund wasteful projects to signal their...

Consider an agent (manager, artist, etc.) who has imperfect private information about his productivity. At the beginning of his career (period 1, short run"), the agent chooses among publicly observable actions that generate imperfect signals of his productivity. The actions can be ranked...

Open source projects produce goods or standards that do not allow for the appropriation of private returns by those who contribute to their production. In this paper we analyze why programmers will nevertheless invest their time and effort to code open source software. We argue that the...

The paper enriches a standard signaling model of education with issues of social distance defined over educational achievements. More specifically it considers the effects that the presence of conformist and status seeking individuals has on educational dynamics. Under very reasonable...

This paper studies how a signaling motive becomes a cause of excessive disobedience and an obstacle to authority in a dynamic relationship. It shows that an agent has incentive to disobey a principal's order so that the principal adjusts the future exercise of authority in the agent's favor. The...

We study a model of strategic persuasion based on the theory of cheap talk, in which a better-informed agent manipulates two decision-makers' joint decision on alternative proposals. With the heterogeneity of two decision-makers' value of the outside option, only the decision-maker with the...

This paper studies repeated communication regarding a multidimensional collective decision in a large population. When preferences coincide but beliefs about the consequences of the various decisions diverge, it is shown, under some specific assumptions, that public communication causes the...