This paper explores the use of auctions for privatizing public assets. In our model, a single insider bidder (e.g., incumbent management of a government-owned firm) possesses information about the asset's risky value. In addition, bidders are privately informed about their costs of exploiting...

We specify a dynamic model in which agents adjust their decisions toward higher payoffs, subject to normal error. This process generates a probability distribution of players' decisions that evolves over time according to the Fokker-Planck equation. The dynamic process is stable for all...

We consider a duopoly pricing game with a unique Bertrand-Nash equilibrium. The high-price firm has a nonvanishing market share, however, and intuition suggests that observed prices may be positively related to this market share. This relationship is implied by a model in which players make...

Every experimentalist will sooner or later come across a situation in which results from initial baseline treatments conform nicely to the Nash equilibrium, but subsequent changes in parameters push the data in ways not predicted by Nash. This may happen when one begins by giving theory its best...

Despite the discovery of predatory intent in several widely cited antitrust cases, many industrial organization economists have argued that predatory pricing is irrational and rarely observed. The argument is that pricing below cost in order to drive competitors out of the market will be...

The direct sale of emissions allowances by auction is an emerging characteristic of cap-and-trade programs. This study is motivated by the observation that all of the major implementations of cap-and-trade regulations for the control of air pollution have started with a generous allocation of...

We experimentally study auctions versus grandfathering in the initial assignment of pollution permits that can be traded in a secondary spot market. Low and high emitters compete for permits in the auction, while permits are assigned for free under grandfathering. In theory, trading in the spot...

We report experimental results from long sequences of decisions in environments that are theoretically prone to severe information cascades. Observed behaviour is much different-information cascades are ephemeral. We study the implications of a theoretical model based on quantal response...