Equivalence of Auctions and Posted Prices

We determine the equilibrium in two transaction mechanisms: auctions and posted prices. Agents choose whether to participate in markets where trades are consummated by auctions or in markets where sellers post prices. We show that the selling mechanisms are practically equivalent. Previous studies have shown that auction markets emerge as a unique evolutionary stable equilibrium when compared to bargaining markets. Posted price market dominate bargaining markets similarly.Auctions;posted prices;random matching.

Price Formation by Bargaining and Posted Prices

We study markets with two types of agents. Sellers have an indivisible good for sale, and their reservation value is zero. Buyers are randomly matched with sellers, and they value the good at unity. Sellers may be matched with any positive number of buyers, and they may choose to determine the price of the good either by bargaining or by posting prices. These choices are relevant only when a seller meets exactly one buyer. If two or more buyers are matched to a seller the buyers engage in an auction. The agents may choose whether to go to markets with bargaining or posted prices. We show that both market structures are equilibria but that they do not co-exist. Markets with posted prices are shown to be the unique evolutionary stable equilibrium.Bargaining;posted prices;random matching.

Multilateral Non-Cooperative Bargaining in a General Utility Space

We consider an n-player bargaining problem where the utility possibility set is compact, convex, and stricly comprehensive. We show that a stationary subgame perfect Nash equilibrium exists, and that, if the Pareto surface is differentiable, all such equilibria converge to the Nash bargaining solution as the length of a time period between offers goes to zero. Without the differentiability assumption, convergence need not hold.multilateral, bargaining, general utility set

Bargaining with Many Players: A Limit Result

We provide a simple characterization of the stationary subgame perfect equilibrium of an alternating offers bargaining game when the number of players increases without a limit. Core convergence literature is emulated by increasing the number of players by replication. The limit allocation is interpreted in terms of Walrasian market for being the first proposer.non-cooperative bargaining, stationary equilibrium, replication, Walrasian market

Demented Prisoners

We study infinitely repeated Prisoners' Dilemma, where one of the players may be demented. If a player gets demented in period t after his choice of action, he is stuck to this choice for the rest of the game. So if his last choice was ``cooperate'' just before dementia struck him, then he's bound to cooperate always in the future. Even though a demented player cannot make choices any more he enjoys the same payoffs from strategy profiles as he did when healthy. A player may prove he is still healthy by showing a (costly) health certificate. This is possible only as long as the player really is healthy: a demented player cannot get a clean bill of health. We study an asymmetric information game where it is known that player 1 cannot get demented but player 2 may be either a ``healthy'' type who will never be demented or a ``dementible'' type who eventually will get demented. We study when cooperation can be maintained in a perfect Bayesian equilibrium with at most health check.prisoners' dilemma, dementia, co-operation

p(x+y)=p(x)+p(y)-p(x)p(y)

I show that if x and y are regarded as investments in R&D and p is the probability of discovery and if p satis…es p(x+y)=p(x)+p(y)-p(x)p(y) then p is practically uniquely determined.

Patents Hinder Collusion

We argue that a patent system makes collusion among innovators more difficult. Our simple argument is based on two properties of the patent system. First, a patent not only protects against infringement but also against retaliation by former collusion members. Second, a deviator has an equal chance with former collusion members to get a patent on new innovations. We show that if a patent system reduces spillovers, it renders collusion impossible. Moreover, it is possible to design a patent system that simultaneously increases knowledge spillovers and eliminates collusionPatens, Collusion, Secrecy, Innovation