An infinitely repeated monetary policy game a la R. Barro and D. Gordon (1983) is considered. Before the game starts the government announces a policy rule. If there is a slight probability that government is honest and a slight probability that the government makes mistakes, then a sufficiently...

Adaptive contracting occurs when a principal experiments with the delegation of authority through leaving contracts incomplete. We highlight two potential benefits of adaptive contracting: First, the delegation of authority can be advantageous even if the agent acts opportunistically, since...

We study long run effects of transparency on the consumer side in a differentiated market. Only some consumers know prices. Increasing transparency reduces the equilibrium price, profit and firm entry. This improves welfare and, in most cases, average consumer utility.

We analyze the economic consequences of strategic delegation of the right to decide between public or private provision of governmental service and/or the authority to negotiate and renegotiate with the chosen service provider. Our model encompass both bureaucratic delegation from a government...

This paper considers political competition and the consequences of political polarization when parties are better informed about how the economy functions than voters are. Specifically, parties know the cost producing a public good, voters do not. An incumbent's choice of policy acts like a...

This paper analyses wages and employment in a repeated game between a union and a firm. The parties cannot enter a binding contract, and revenue is fluctuating. It is shown that if discount factors are moderate, then the best sequence of wage rates and employments sustainable in a subgame...