In repeated games with imperfect public monitoring, players can use public signals to perfectly coordinate their behavior. Our study of repeated games with imperfect private monitoring focusses on the coordination problem that arises without public signals. We present three new observations....

Traditional finance theory based on the assumptions of symmetric information and perfect and competitive markets has provided many important insights. These include the Modigliani and Miller Theorems, the CAPM, the Efficient Markets Hypothesis and continuous time finance. However, many empirical...

This paper investigates the Harsanyi-purifiability of mixed strategies in the repeated prisoners' dilemma with perfect monitoring. We perturb the game so that in each period, a player receives a private payoff shock which is independently and identically distributed across players and periods....

The swiftness and devastating impact of recent financial crises have taken many market participants by surprise, and pose challenges for economists seeking a theory of the onset of a crisis. We propose such a theory based on two features. The actions of diverse economic actors which undermine...

The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying mechanism design on richer type spaces. Copyright The Econometric Society 2005.

This paper proposes the solution concept of interim rationalizability, and shows that all type spaces that have the same hierarchies of beliefs have the same set of interim rationalizable outcomes. This solution concept characterizes common knowledge of rationality in the universal type space.

Recent trends toward greater central bank independence and the adoption of formal inflation targeting by several countries have served to emphasise the importance of communication policy. In this paper, we explore some of the economic effects of public information that arise whenever public...

We study games with strategic complementarities, arbitrary numbers of players and actions, and slightly noisy payoff signals. We prove limit uniqueness: as the signal noise vanishes, the game has a unique strategy profile that survives iterative dominance. This generalizes a result of Carlsson...

In a financial market where traders are risk averse and short lived and prices are noisy, asset prices today depend on the average expectation today of tomorrow's price. Thus (iterating this relationship) the date 1 price equals the date 1 average expectation of the date 2 average expectation of...

Recent trends toward greater central bank independence and the adoption of formal inflation targeting by several countries have served to emphasize the importance of communication policy. In this paper, we explore some of the economic effects of public information that arise whenever public...