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Abstract:
We consider a multilateral Nash demand game where short-sighted players come to the bargaining table with requests for both coalition partners and the potentially generated resource. We prove that group learning leads with probability one to complete cooperation and a strictly self-enforcing allocation (i.e., in the interior of the core). Highlighting group dynamics, we demonstrate that behaviors which appear destructive can themselves lead to beneficial and strictly self-enforcing cooperation.

Nash bargaining, Learning, Core, Group conflict

Abstract:
We provide theoretical foundations for several common (nested) representations of intrinsic linear habit formation. Our axiomatization introduces an intertemporal theory of weaning a decision-maker from her habits using the device of compensation. We clarify differences across specifications of the model, provide measures of habit-forming tendencies, and suggest methods for axiomatizing time-nonseparable preferences.

Linear habit formation, Time-nonseparable preferences, Compensation, Weaning, Compensated separability, Gains monotonicity, Endogenously generated auxiliary spaces

Abstract:
To facilitate systematic study of multi-self decision making, this paper proposes an axiomatic framework that encompasses a variety of models proposed in economics, psychology, and marketing. We model a decision-maker as a collection of utility functions (selves) and an aggregation rule (a theory of how selves are activated by choice sets) satisfying five simple axioms of social choice. For a broad class of aggregators, we show that with sufficiently many selves the resulting model can rationalize any choice function. We propose a method for counting IIA violations in a choice behavior, and show that the set of behaviors an aggregator can rationalize using n selves is bounded below by the set of choice functions for which the number of IIA violations is at most a given linear function of n. We apply our results to study Strotzian choice over menus and household decision-making.

Multiple selves, IIA violations, Rationalizability, Complexity

Abstract:
I use the theories of duality and optimal branchings to find a necessary and sufficient characterization of stochastically stable limit sets (SSLS) that helps improve the radius - modified coradius test of Ellison (2000). The improved shortcut I offer may permit the identification of SSLS when Ellison's radius - modified coradius test fails to identify any, or may be able to pinpoint the true SSLS in cases where Ellison's test identifies only a superset. I also demonstrate precisely why the radius - modified coradius test is not universally applicable and illuminate the connection between the modified coradius and the Lagrange multipliers of the optimal branching problem.

Evolutionary games, Stochastic stability, Optimal branchings, Extended radius, Extended coradius, Modified coradius

Abstract:
We propose a model in which teammates promise to complete socially efficient tasks; each task is an activity that a single person must exert costly effort to complete properly, but can be “botched” effortlessly. Each team member has limited capacity to allocate between monitoring and productive tasks. Such resource constraints may arise from limited time, staffing, capital, attention, or, as in our main example, bounded memory. The possibility of completing each task properly is privately observed, and monitoring is imperfect. We find that an optimal contract in this setting is generally “forgiving,” and that players optimally make “empty promises” that they don’t necessarily intend to fulfill. As uncertainty in production and monitoring increases (e.g., due to greater forgetfulness), players optimally make more empty promises and devote more of their resources to monitoring.

Bounded memory, Working memory, Team production, Costly monitoring, Moral hazard, Capacity constraints, Optimal contracts, Forgiveness, Empty promises, Collective memory, Crosscueing, Transactive responsibility