This paper provides a model of the repeated prisoner's dilemma in which cheap-talk communication is necessary in order to achieve cooperative outcomes in a long-term relationship. The model is one of complete information. I consider a continuous time repeated prisoner's dilemma game where...

This paper develops a model of rational bubbles where trade of an asset takes place through a chain of middlemen. We show that there exists a unique and robust equilibrium, and a bubble can occur due to information frictions in bilateral and decentralized markets. Under reasonable assumptions,...

Antitrust authorities view the exchange of detailed information among firms regarding costs, prices or sales as being potentially anti-competitive. The reason is that such exchanges may allow competitors to closely monitor each other, thereby facilitating greater coordination. But the exchange...

This paper presents a simple equilibrium model in which collateralized credit emerges endogenously. Just like in repos, individuals cannot commit to the use of collateral as a guarantee of repayment, and both lenders and borrowers have incentives to renege. Our theory provides a micro-foundation...

This paper presents a simple equilibrium model in which collateralized credit emerges endogenously. Just like in repos, individuals cannot commit to the use of collateral as a guarantee of repayment, and both lenders and borrowers have incentives to renege. Our theory provides a micro-foundation...

This paper develops a finite-period model of rational bubbles where trade of an asset takes place through a chain of middlemen. We show that there exists a unique equilibrium, and a bubble can occur due to higher-order uncertainty. Under reasonable assumptions, the equilibrium price is...