This paper presents a simple boundedly rational model of a firm and consumer behaviour. We formulate an entry game, where every firm decides on investing in R&D for inventing a new product that will appeal to certain group of consumers. The success depends on the amount of funds available for...

This paper discusses the strategic role of mismatching, where players voluntarily form inefficient teams or forego the formation of efficient teams, respectively. Strategic mismatching can be rational when players realize a competitive advantage (e.g. harming other competitors). In addition, the...

This paper deals with price competition among multiproduct firms. We consider a model with n firms and one representative buyer. Each firm produces a set of products that can be different or identical to the other firms' products. The buyer is characterized by her willingness to pay -in monetary...

We experimentally test whether intentional and observable discriminatory pay of symmetric agents in the Winter (2004) game causes low paid agents to reduce effiort. We control for intentionality of wages by either allowing a principal to determine wages or by implementing a random process. Our...

This paper examines two three-stage games with a labor-managed income-perworker- maximizing firm and a profit-maximizing firm. In the first stage, the labormanaged firm (resp. the profit-maximizing firm) decides whether to make a commitment to capacity. In the second stage, the other firm...

In a typical corporate hierarchy, the manager is delegated the authority to make strategic decisions, and to contract with other employees. By studying a model with one principal and two agents where one agent can gather information that is valuable for the principal's project choice and the...

In the present paper a model of competition between sports clubs in a sports league is presented. Clubs are endowed with initial players but at a cost clubs are able to sell their initial players and buy new players. The results are that: if the quality of players is one-dimensional, then...

Mismatches typically arise because of information problems in markets. This paper discusses the possibility of mismatching in partnerships focussing on strategic mismatches that cannot be explained by information problems. It is shown that due to market competition sometimes players can profit...

In a typical corporate hierarchy, the manager is delegated the authority to make decisions that set directions for the organization, employ subordinates and contract with external suppliers. This paper explains when such delegation of authority can be optimal, using a model of a firm with three...

We study an example of strategic delegation in Cournot duopoly and show that if contracts are both observable and renegotiable before becoming common knowledge at the outset of the delegated game, the strategic value of contracts is preserved, but the set of equilibria is greatly enlarged....