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Asymmetric Information and Legislative Rules: Some Amendments
In: American political science review, Volume 95, Issue 2, p. 435-452
ISSN: 1537-5943
We reexamine the major tenets of the informational theory of legislative rules, focusing on the informational efficiency of rules with varying degrees of restrictiveness. When committees are heterogeneous, full efficiency is attainable under the unrestrictive open rule as well as the somewhat restrictive modified rule. In contrast, the restrictive closed rule always leads to inefficiencies. When committees are homogeneous, the situation is different. All equilibria are inefficient regardless of legislative rules, but the closed rule leads to greater informational efficiency than does the open rule. Furthermore, the efficiency gains under the closed rule more than offset distributional losses regardless of the degree of preference divergence. We also examine the incentives provided by the different rules for information acquisition and committee specialization.
Spreading Information via Social Networks: An Irrelevance Result
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Rational Exuberance and Bubbles
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Startups and Upstarts: Disadvantageous Information in R&D
In: Journal of political economy, Volume 129, Issue 2, p. 534-569
ISSN: 1537-534X
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Information exchange in cartels
In: The Rand journal of economics, Volume 51, Issue 2, p. 421-446
ISSN: 1756-2171
AbstractAntitrust authorities view the exchange of information among firms regarding costs, prices, or sales as anticompetitive. Such exchanges allow competitors to closely monitor each other, thereby facilitating collusion. But the exchange of aggregate information, perhaps via a third party, is legal. The logic is that collusion is difficult if the identity of a price‐cutting firm cannot be ascertained. Here, we examine this logic using Stigler's model of secret price cuts. We first identify circumstances such that when no information exchange is possible, collusion is difficult. We then show that if firms' aggregate sales are made public, nearly perfect collusion is possible.
Information Exchange in Cartels
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Working paper
Communication and Cooperation in Repeated Games
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Working paper
On Communication and Collusion
In: American economic review, Volume 106, Issue 2, p. 285-315
ISSN: 1944-7981
We study the role of communication within a cartel. Our analysis is carried out in Stigler's (1964) model of repeated oligopoly with secret price cuts. Firms observe neither the prices nor the sales of their rivals. For a fixed discount factor, we identify conditions under which there are equilibria with "cheap talk" that result in near-perfect collusion, whereas all equilibria without such communication are bounded away from this outcome. In our model, communication improves monitoring and leads to higher prices and profits. (JEL C73, D43, D83, L12, L13, L25)
On Tacit versus Explicit Collusion
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Working paper
Majority Rule and Utilitarian Welfare
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Working paper
Overcoming Ideological Bias in Elections
In: Journal of political economy, Volume 119, Issue 2, p. 183-211
ISSN: 1537-534X