We study the process of equilibrium selection in games when players have social preferences of the type discussed, among others, by Rabin (1993) and Segal and Sobel (2007). To this end, we employ a standard noisy version of the best response dynamics. We obtain several results concerning some...

A freeze-out bond exchange offer can occur when a firm wants to replace an exist- ing bond, issued with a covenant, with a new bond that does not have this type of restriction. If the bondholders are not fully coordinated, the shareholders can make the exchange offer unfair to capture wealth...

The Nash Demand Game (NDG) has been widely employed to model the emergence of moral norms such as property rights. We criticize this use because it neglects the important role played by incentives. Since in a NDG players are assumed to divide a windfall, there is no way to model the idea that...

When contracts are not enforceable, or property rights are not clearly defined, individuals might lack an incentive to carry out costly investments even when they are socially efficient. Some recent contributions such as Ellingsen and Robles (2002) prove that this problem might be less dramatic...

Holler and Wickstrom (1999) suggest that social change can be triggered by scandals intentionally created by groups of people who intend to change the current social conventions. I elaborate on their approach, introducing the hypothesis that people's preferences change over time, so that they...

The 2´2 inspection game has been frequently employed to model the problem of law enforcement. This game is notoriously troublesome, because (a) its unique Nash equilibrium is never strict and (b) by playing their maximin strategies players can secure the same payoff they get when both play...