This paper provides a general overview of the literature on the core of an exchange economy with asymmetric information. Incentive compatibility is emphasized in studying core concepts at the ex ante and interim stage. The analysis includes issues of non-emptiness of the core as well as core...

In a differencial economy with quasi-linear utilities, monetary transfers facilitate the fulfilment of incentive compability constraints: the associated ex ante core is generically nonempty. However, we exhibit a well-behaved exchange economy in which this core is empty, even if goods are...

We study the. Incentive effects of endogenous group formation in a voluntary contributon experiment. Subjects are given information on the past contributions of others and allowed to express a preference for partners. On the basis of the stated preferences new groups are formed. We find that the...

We present results from a novel experiment on the effect of a policy designed to encourage cooperation in a prisoner's dilemma game. We find that the effect of this policy on the level of cooperation is greater when it was chosen democratically by the subjects than when it was exogenously...

The prospect of receiving a monetary sanction for free riding has been shown to increase contributions to public goods. We ask whether the impulse to punish is unresponsive to the cost to the punisher, or whether, like other preferences, it interacts with prices to generate a conventional demand...

In a game with rational expectations, individuals simultaneously refine their information with the information revealed by the strategies of other individuals. At a Nash equilibrium of a game with rational expectations, the information of individuals is essentially symmetric: the same profile of...

Constitutional resolution of disputes between constituent groups of a polity avoids the incremental costs of civil conflict. But, the political process prescribed by a constitution provides a viable alternative to civil conflict if and only if the constitution is self enforcing. This paper...

Monetary and fiscal policy do not determine the stochastic path of prices: in the absence of financial policy, there remains indeterminacy indexed by an arbitrary probability measure over the set of states of the world. With an interest rate policy, and only if the asset market is complete,...

In many countries, especially poor countries, a heavy burden of taxes, bribes, and bureaucratic hassles drives many producers into the informal sector. Is this situation explicable only as a consequence of either the ignorance or the ineptitude of the state authorities? On the contrary this...

We study a strategic model of dynamic trading where agents are asymmetrically informed over common value sources of uncertainty. There is a continuum of uninformed buyers and a finite number of sellers, some of them informed. When there is only one seller, full information revelation never...