In spatial environments we consider social welfare functions satisfying Arrow''s requirements, i.e. weak Pareto and independence of irrelevant alternatives. When the policy space is a one-dimensional continuum such a welfare function is determined by a collection of 2 N strictly quasiconcave...

We analyze a principal-agent model in which a principal has two possibilities to improve his knowledge about the quality of an investment project. First, he has access to an informationtechnology that provides a \textit{verifiable}, unbiased signal. Second, he can hire an agent who detects bad...

This note reexamines the connection between the asymmetric Nash bargaining solution and the equilibria of strategic bargaining games. Several papers in the literature obtain the asymmetric Nash bargaining solution as the unique limit of subgame perfect equilibria in stationary strategies when...

Previous theoretical literature proved the existence of an upper bound on efficiency in bilateral bargaining. In contrast, experiments consistently find players obtaining higher efficiency than the upper bound if they are allowed to communicate before the 1/2-double auction. We bridge this gap...

We introduce a new method of varying risk that bidders face in first-price and second-price private value auctions. We find that decreasing bidders’ risk in first-price auction reduces the degree of overbidding relative to the risk-neutral Bayesian Nash equilibrium prediction.This finding is...

This paper analyses the problem of aggregating judgments when strategic voters hold privateinformation about which propositions are true and share a common preference for true collectivejudgments. We go beyond previous work by introducing logical interconnections between thepropositions. A...

In a laboratory experiment, we investigate the impact of temporary buy-options on efficiency, revenues, and bidding behavior in online proxy-auctions when bidders have independent private valuations. We show that the introduction of a buy-option reduces efficiency and at the same time fails to...

In this paper a selection theory for stochastic games is developed. The theory itself is based on the ideas of Harsanyi and Selton to select equilibria for games in standard form. We introduce several possible definitions for the stochastic tracing procedure, an extension of the linear tracing...

In this paper we study the structure of the bilateral communication links within Online Consumer Communication Networks (OCCNs), such as virtual communities. Compared to the offline world, consumers in online networks are highly flexible to choose their communication partners and little is known...

A probabilistic belief revision function assigns to every initial probabilistic belief and every observable event some revised probabilistic belief that only attaches positive probability to states in this event. We propose three axioms for belief revision functions: (1) linearity, meaning that...