First we show that for wealth-constrained agents who may commit an act twice, the optimal sanctions are the offender's entire wealth for the first crime, and zero for the second. Then we ask whether this decreasing sanction scheme is subgame perfect (time consistent), i.e., does a rent-seeking...

In a two-stage extensive form game where followers can observe moves by leaders only with noise, pure subgame perfect Nash equilibria of the limiting game without noise may not survive arbitrarily small noise. Still, for generic games, there is always at least one subgame perfect equilibrium...

We present an experiment designed to separate the two commonplace explanations for behavior in ultimatum games—subjects’ concern for fairness versus the failure of subgame perfection as an equilibrium refinement. We employ a tournament structure of the bargaining interaction to...

In this paper, we present a non-cooperative wage bargaining model in which preferences of both parties, a union and a firm, are expressed by the sequences of discount rates varying in time. For such a wage bargaining with non-stationary preferences, we determine subgame perfect equilibria...

This paper concludes that, when offenders are wealth constrained and the government is resource constrained and can commit to a certain policy throughout the whole planning horizon, cost minimizing deterrence is decreasing, rather than increasing, in the number of offenses. By extending the...

Limiting inspection to publicly correlated strategies linearizes the problem of finding subgame perfect equilibria for indefinitely repeated Prisoners' Dilemmas. Equilibrium strategies satisfy a matrix inequality; the matrix depends on the duration of the punishment mechanism. The existence of...

Perfect information games have a particularly simple structure of equilibria in the associated normal form. For generic such games each of the finitely many connected components of Nash equilibria is contractible. For every perfect information game there is a unique connected and contractible...

We study a Baron-Ferejohn (1989) type of bargaining model to which we append an investment stage. As long as no agreement is reached, a new proposer is selected randomly from the player set. A proposal is accepted if at least q players accept it. Prior to the bargaining stage, players may make...

I study the estimation of finite sequential games with perfect information. The major challenge in estimation is computation of high-dimensional truncated integration whose domain is complicated by strategic interaction. I show that this complication resolves when unobserved...

This paper brings together two of the most important solution concepts of game theory �subgame-perfect Nash equilibrium of a non-cooperative game and the core of a cooperativegame. Our approach rests on two fundamental ideas: (1) Given an extensive game, the formationof a coalition leads to...