Politicians trade off the cost of acquiring and processing information against the benefit of being reelected. Lobbyists may possess private information upon which politicians would like to rely without the effort of verification. If the politician does not try to verify, however, the lobbyist...

Is it better to move first, or second— to innovate, or to imitate? We look at this in a context with both asymmetric information and payoff externalities. Suppose two players, one with superior information about market quality, consider entering one of two new markets immediately or waiting...

If there is competition for access to an underpriced good such as a free parking spot, the competition can eat up the entire surplus, eliminating the social value of the good. There is a discontinuity in social welfare between “enough” and “not enough,” with the minimum social welfare...

Is it better to move first, or second— to innovate, or to imitate? We look at this in a context with both asymmetric information and payoff externalities. Suppose two players, one with superior information about market quality, consider entering one of two new markets immediately or waiting...

Bidders in auctions must decide whether and when to incur the cost of estimating the most they are willing to pay. This can explain why people seem to get carried away, bidding higher than they had planned before the auction and then finding they had paid more than the object was worth to them....

Legislators in modern democracies accept bribes that are small compared to the value of the statutes they pass and allow bans against bribery to be enforced. In the authors' model of bribery, rational legislators accept bribes smaller not only than the benefit the briber receives but than the...

It is natural to suppose that a prosecutor's conviction rate--the ratio of convictions to cases prosecuted--is a sign of his competence. Prosecutors, however, choose which cases to prosecute. If they prosecute only the strongest cases, they will have high conviction rates. Any system that pays...

Bidders have to decide whether and when to incur the cost of estimating their own values in auctions. This can explain why people seem to get carried away, bidding higher than they had planned before the auction and then finding they had paid more than the object was worth to them. Even when...

A long-term relationship such as marriage will not operate efficiently without sanctions for misconduct, of which adultery is one example. Traditional legal sanctions can be seen as different combinations of various features, differing in who initiates punishment, whether punishment is just a...