29,867 research outputs found

    Incomplete Contracts in Dynamic Games

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    I develop a dynamic model of costly private provision of public goods where agents can also invest in cost-reducing technologies. Despite the n+1 stocks in the model, the analysis is tractable and the (Markov perfect) equilibrium unique. The frame-work is used to derive optimal incomplete contracts in a dynamic setting. If the agents can contract on provision levels, but not on investments, they invest suboptimally little, particularly if the contract is short-term or close to its expiration date. To encourage sufficient investments, the optimal and equilibrium contract is more ambitious if it is short-lasting, and it is tougher to satisfy close to its expiration date. If renegotiation is possible, such a contract implements the first best. The results have important implications for how to design a climate treaty.Dynamic private provision of public goods, dynamic common-pool problems, dynamic hold-up problems, incomplete contracts, renegotiation design, climate change and climate agreements JEL Classification Numbers: D86, H87, Q54, F53

    Do side payments help? Collective decisions and strategic delegation

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    I investigate when a exible bargaining agenda, where side payments are possible, facilitates cooperation in a context with strategic delegation. On the one hand, allowing side payments may be necessary when one partys participation constraint otherwise would be violated. On the other, with side payments each principal appoints a delegate that values the project less, since this increases her bargaining power. Reluctant agents, in turn, implement too few projects. I show that side payments are bad if the heterogeneity is small while the uncertainty and the typical value of the project are large. With a larger number of parties there may be a stalemate without side payments, but delegation becomes more strategic as well, and cooperation decreases in either case.Collective action, side transfers, bargaining agenda, strategic delegation, issue linkages

    Flexible Integration

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    For a club such as the European Union, an important question is when, and under which conditions, a subset of the members should be allowed to form "inner clubs" and enhance cooperation. Flexible cooperation allows members to participate if and only if they benefit, but it generates a freerider problem if potential members choose to opt out. The analysis shows that flexible cooperation is better if the heterogeneity is large and the externality small. The best possible symmetric and monotonic participation mechanism, however, is implemented by two thresholds: A mandatory and a minimum participation rule. Rigid and flexible cooperation are both special cases of this mechanism. For each of these thresholds, the optimum is characterized.

    The Dynamics of Climate Agreements

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    I provide a novel dynamic model with private provision of public bads and investments in technologies. The analysis is tractable and the MPE unique. By adding incomplete contracts, I derive implications of and for international climate treaties. While the non-cooperative equilibrium is bad, short-term agreements are worse due to hold-up problems. A long-term agreement should be more ambitious if it is rela- tively short-lasting and the technological externality large. The length itself should increase in this externality. With renegotiation, the outcome is …rst best. The technological externalities are related to trade agreements, making them strategic substitutes to climate treatieDynamic private provision of public goods, dynamic common pool prob- lems, dynamic hold-up problems, incomplete contracts, time horizon of contracts, renegotiation design, climate change, climate agreements and trade agreements

    Random Permutation Statistics and An Improved Slide-Determine Attack on KeeLoq

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    KeeLoq is a lightweight block cipher which is extensively used in the automotive industry. Its periodic structure, and overall simplicity makes it vulnerable to many different attacks. Only certain attacks are considered as really "practical" attacks on KeeLoq: the brute force, and several other attacks which require up to 2p16 known plaintexts and are then much faster than brute force, developed by Courtois et al., and (faster attack) by Dunkelman et al. On the other hand, due to the unusually small block size, there are yet many other attacks on KeeLoq, which require the knowledge of as much as about 2p32 known plaintexts but are much faster still. There are many scenarios in which such attacks are of practical interest, for example if a master key can be recovered, see Section 2 in [11] for a detailed discussion. The fastest of these attacks is an attack by Courtois, Bard and Wagner from that has a very low complexity of about 2p28 KeeLoq encryptions on average. In this paper we will propose an improved and refined attack which is faster both on average and in the best case. We also present an exact mathematical analysis of probabilities that arise in these attacks using the methods of modern analytic combinatorics
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