edgeworth price cycles cost based pricing and sticky pricing in retail gasoline markets abstract this paper examines dynamic pricing behavior in canadian retail gasoline markets i find three distinct pricing patterns cost based pricing sticky pricing and sharp asymmetric retail price cycles that resemble the edgeworth cycles of maskin and tirole 1988 i use a markov switching regression to estimate the prevalence of the regimes and the structural characteristics of the cycles themselves i find cycles are more prevalent when there are more small firms and are accelerated and amplified with very many small firms in markets with few small firms sticky pricing dominates the findings are consistent with the theory of edgeworth cycles

dynamic adverse selection a theory of illiquidity fire sales and flight to quality we develop a dynamic equilibrium model of asset markets with adverse selection there exists a unique equilibrium in which better quality assets trade at higher prices but with a lower price dividend ratio in less liquid markets sellers of high quality assets signal quality by accepting a lower trading probability we show how the distribution of sellers private information affects an asset s price and liquidity how a change in that distribution can cause a re sale and a ight to quality and how asset purchase and subsidy programs may raise prices and liquidity and reverse the ight to quality jel d82 g12 this paper develops a dynamic equilibrium model of asset markets with adverse selection the owners of heterogeneous assets are privately informed about the quality of their assets sellers set prices for their assets recognizing that sales may be rationed at high prices buyers set prices recognizing that the quality of available assets may depend on the price selected in equilibrium sellers of high quality assets are willing to set a high price despite the low sale probability because the continuation value from failing to sell a high quality asset is high conversely sellers of low quality assets opt for a low price buyers are indifferent between paying a low price for a low quality asset and a high price for a high quality asset we prove these results in a deliberately stylized dynamic general equilibrium framework assets are perfectly durable and pay a constant dividend each period some amount of a perfectly perishable consumption good better quality assets pay a higher dividend but only the asset s current owner observes the dividend this is the source of private information and the root of the adverse selection problem as in akerlof 1970 the only permissible trades are between the consumption good and the asset individuals are risk neutral and have a discount factor that changes over time independently across individuals creating gains from trade finally discount factors are observable which ensures that patient individuals never sell assets since there are no gains from trade we believe this framework is useful for capturing

optimal collusion with internal contracting abstract in this paper two firms play an infinitely repeated bertrand game and each firm has an agent who produces the firm s output and holds private information about production costs the colluding firms fix prices and allocate market shares based on their agents information we develop a model of collusion in which firms use the presence of agents as a strategic opportunity to restrict their incentives to distort private information we show that such firm behavior may expand the scope of optimal collusion whether market allocation schemes are asymmetric or symmetric

financial intermediary coalitions abstract in this article an environment in which the investment opportunities of agents are private information is studied and it is shown that financial intermediaries arise endogenously within that environment it is established that financial intermediaries are part of an efficient arrangement in the sense that they are needed to support the authors private information core allocations these intermediaries which are coalitions of agents exhibit the following characteristics in equilibrium they borrow from and lend to large groups of agents they produce information about investment projects and they issue claims that have different state contingent payoffs than claims issued by ultimate borrowers

moral hazard and private monitoring we clarify the role of mixed strategies and public randomization sunspots in sustaining near efficient outcomes in repeated games with private monitoring we study a finitely repeated game where the stage game has multiple equilibria and show that mixed strategies can support partial cooperation but cannot approximate full cooperation even if monitoring is almost perfect efficiency requires extensive form correlation where strategies can condition upon a sunspot at the end of each period for any finite number of repetitions we approximate the best equilibrium payoff under perfect monitoring assuming that monitoring is sufficiently accurate and sunspots are available journal of economic literature classification numbers c73 d82

limit theorems for markets with sequential bargaining this paper models trade as a non coopertative strategic game played at an inlinite sequence of dates a single indivisible commodity is traded buyers and sellers have transferable utility and are characterized by their reservation utilities they meet at random and bargain over the price at which a single unit of the good will be exchanged under a variety of circumstances it is shown that as the costs of search and bargaining become negligible the outcome of the game converges to the competitve flow equilibrium even when there is complete information journal of economic literature classification numbers 022 19x7

communication in repeated games with private monitoring abstract the paper considers repeated games where each player can be observed by only a subset of the other players and where players can make public announcements about the behavior of the players they observed we address the following question what is the minimal level of observability that is required to obtain efficient outcomes the main result is that the limit set of sequential equilibrium payoffs when the discount factor tends to one contains the set of individual rational payoffs whenever each player is observed by at leasttwoother players journal of economic literatureclassification number c73

edgeworth price cycles and intertemporal price discrimination in a retail gasoline market exhibiting edgeworth price cycles prices change asymmetrically with many small decreases interrupted by occasional large increases the result is a de facto menu of prices from which consumers can choose based on exactly when they buy this article introduces four classes of purchase timing strategies designed to systematically shift consumer purchases towards the cycle troughs it shows in the study market of toronto canada the monetary gains to consumers from optimized timing strategies are as high as 3 9 markups earned from these consumers fall up to 82 in spite of the gains from timing strategies surprisingly few consumers use them evidence is presented that a main reason is that consumers are not well informed about the cycles policy implications are discussed

information can wreck cooperation a counterpoint to kandori 1992 we propose a simple model of repeated games with private monitoring and time varying information structures we then obtain an example demonstrating that the set of achievable equilibrium payos may shrink when play

the principal agent relationship with an informed principal ii common values in many circumstances a principal may have relevant private information when she proposes a contract to an agent we analyze such a principal agent relationship as a noncooperative game the principal proposes a contract which is accepted or rejected by the agent who for most of our analysis has no private information the contract is executed if accepted otherwise the reservation allocation takes effect this allocation may be determined by a pre existing contract which the principal by her proposal is attempting to renegotiate or it may simply be the no trade point in this paper we assume that the principal s information directly affects the agent s payoff before solving the game we discuss pareto efficiency with asymmetric information we define an incentive compatible allocation to be weakly interim efficient wie if there exists no alternative incentive compatible allocation that both parties prefer for all possible beliefs that the agent might have about the principal s private information type we show that any wie allocation is interim efficient ie for some beliefs the rothschild stiglitz wilson rsw allocation relative to the reservation allocation l is the allocation that maximizes the payoff of each type of principal within the class of incentive compatible allocations that guarantee the agent at least the utility he gets from a irrespective of his beliefs about the principal s type the equilibrium set of the contract proposal game consists of the allocations that weakly pareto dominate the rsw allocation thus there is a unique equilibrium outcome if and only if the latter is ie and the equilibrium outcome is the rsw allocation itself after characterizing the equilibrium allocations we study those that are renegotiation proof when either the principal or the agent leads the renegotiation we then compare our contract proposal game which is a signaling model with its screening counterpart we conclude by extending our results to the case in which the agent as well as the principal has private information under the assumption of quasi linear preferences

repeated partnership games with imperfect monitoring and no discounting in a partnership game each player s utility depends on the other players actions through a commonly observed consequence e g output profit price which is itself a function of the players actions and an exogenous stochastic environment if a partnership game is repeated infinitely and each player s payoff in the infinite game supergame is the long run average of his expected one period utilities then efficient combinations of one period actions can be sustained as nash equilibria of the supergame even if the players cannot observe other players actions or information but can only observe the resulting consequences

rat race redux adverse selection in the determination of work hours in law firms this paper describes an organizational setting in which professional employees are required to work inefficiently long hours the focus of the authors investigation is large law firms the income sharing that characterizes legal partnerships creates incentives to promote associates who have a propensity to work very hard law firms use indicators of this propensity especially an associate s record of billable hours in promotion decisions reliance upon work hours as an indicator leads to a rat race equilibrium in which associates work too many hours the authors find evidence in support of this conclusion with data they collected from two large law firms copyright 1996 by american economic association

retail price cycles and the presence of small firms abstract in many canadian cities retail gasoline prices remain unchanged for weeks at a time while in other cities retail prices cycle increasing sharply and declining slowly in maskin and tirole econometrica 56 1988 571 both price cycles and rigid prices can exist in equilibrium in this article i demonstrate that the existence of these equilibria is dependent on the number of retail outlets operated by the firms constant price equilibria are found to exist only when firms are of similar size however cycle equilibria can be constructed for a wide range of relative sizes

matching markets with adverse selection abstract this paper considers a market with adverse selection in the spirit of rothschild and stiglitz quart j econ 90 1976 629 the major departure from existing approaches is that we model a decentralized market that is open ended and constantly refilled by new participants e g by new workers and firms in the case of a labor market the major novelty of this approach is that the distribution of types in the market becomes an endogenous variable which is jointly determined with equilibrium contracts as frictions become small we show that the least cost separating contracts are always supported as an equilibrium outcome regardless of the distribution of types among entrants moreover we derive conditions under which this outcome is also unique

screening in a matching market contract design under incomplete information is often analysed in a bilaterally monopolistic setting if the informed party s reservation value does not depend on its private information its type it is a standard result that the uninformed side offers low types distorted contracts to reduce the information rent left to high types we challenge this result by embedding contract design in a matching market environment we consider a market where players meet pairwise and where in each match either side may be chosen to make a take it or leave it offer as frictions become sufficiently low we find that the set of equilibria is independent of whether there is complete or incomplete information in particular all contracts are free of distortions

worker mobility in a search model with adverse selection we analyze the effects of adverse selection on worker turnover and wage dynamics in a frictional labor market we consider a model of on the job search where firms offer promotion wage contracts to workers of different abilities which is unknown to firms at the hiring stage with sufficiently strong information frictions low wage firms offer separating contracts and hire all types of workers in equilibrium whereas high wage firms offer pooling contracts promoting high ability workers only low ability workers have higher turnover rates and are more often employed in low wage firms the model replicates the negative relationship between job to job transitions and wages observed in the u s labor market

existence of nontrivial equilibria in repeated games with imperfect private monitoring abstract we consider finitely repeated games with imperfect private monitoring and provide several sufficient conditions for such a game to have an equilibrium whose outcome is different from repetition of nash equilibria of the stage game surprisingly the conditions are consistent with uniqueness of the stage game equilibrium a class of repeated chicken is shown to satisfy the condition

the effect of explicit communication on pricing evidence from the collapse of a gasoline cartel we study the collapse of collusion in quebec s retail gasoline market following a competition bureau investigation and show that it involved two empirical regularities high margins and asymmetric price adjustments using weekly station level prices we test whether collusion was successful and whether asymmetric adjustments were part of the cartel s strategy we do so in the markets targeted by the investigation and in markets throughout the province with similar pre collapse pricing cyclical markets our results suggest that stations in both target and cyclical markets adjusted pricing following the announcement margins fell by 30 15 in target cyclical markets and adjustments became more symmetric

gasoline demand revisited an international meta analysis of elasticities meta analysis is used to determine if there are factors that systematically affect price and income elasticity estimates in studies of gasoline demand four econometric models are estimated using long run and short run price and income elasticity estimates from previous studies as the dependent variables explanatory variables include functional form lag structure time span national setting estimation technique and other features of the model structure elasticity estimates are found to be sensitive to the inclusion or exclusion of some measure of vehicle ownership static models appear to overestimate short run elasticities underestimate long run price elasticities but pick up the full long run income responsiveness there is variation in the elasticity of demand across countries especially in the short run and gasoline demand appears to be getting more price elastic and less income elastic over time

a simple spatial model for edgeworth cycles abstract maskin and tirole 1998 formalise edgeworth s 1925 model of a dynamic equilibrium between two players where prices increase sharply and decrease slowly the edgeworth cycle here we present an application of the model showing how edgeworth cycles might arise in a marketplace where spatial competition is important we illustrate the approach using the example of retail gasoline markets where edgeworth cycles have been widely observed

equilibrium in a market with sequential bargaining this paper considers a market where pairs of agents who are interested in carrying out a transaction are brought together by a stochastic process and upon meeting initiate a bargaining process over the terms of the transaction the basic bargaining problem is treated with the strategic approach the paper derives the steady state equilibrium agreements analyzes their dependence on market conditions such as the relative numbers of agents of different types and discusses their relations with the competitive equilibrium outcome and other results in the search equilibrium literature this paper considers a market that operates in the following way pairs of agents who have mutual interest in carrying out a transaction are brought together by a stochastic process when two agents meet they initiate a bargaining process over the terms of the transaction if two agents reach an agreement a transaction takes place and they leave the market of course the bargaining positions and hence the agreement reached in any particular meeting will be affected by the conditions prevailing in the market these will include the chances that each of the negotiating parties have of meeting other partners in the event that the agreement in the current negotiations is delayed also the expected length of time required to achieve an alternative transaction and the expected behavior of alternative partners the study of such a market mechanism is of interest for two reasons firstly it captures some realistic aspects of the trade in certain specific markets e g asset markets such as housing and some labor markets secondly it contributes to an understanding of the micro mechanisms of price formation and their role in shaping market outcomes in both cases the features studied are largely neglected in the traditional market equilibrium analyses the related literature includes the articles by diamond 4 5 diamond and maskin 6 mortensen 8 9 and zusman and bell 13 these articles consider markets of the type described above in which transactions are concluded at pairwise meetings of agents the major difference between our work and these articles is in the approach to the basic bargaining problem in the cited articles it is assumed that a meeting is concluded with an instantaneous agreement which divides the associated surplus in an arbitrary predetermined way when the surplus is assumed to be divided equally the division rule is in fact nash s axiomatic bargaining solution in contrast the present paper treats the basic bargaining problem with the strategic approach see rubinstein 19 which constitutes an attempt to look into the bargaining black box this approach explicitly models the time dimension of the bargaining process describes in detail the bargaining procedure and justifies the agreement as a perfect equilibrium in

a belief based approach to the repeated prisoners dilemma with asymmetric private monitoring abstract this paper extends the belief based approach to the repeated prisoners dilemma with asymmetric private monitoring we first find that the previous belief based techniques t sekiguchi efficiency in repeated prisoners dilemma with private monitoring j econ theory 76 1997 345 361 v bhaskar i obara belief based equilibria in the repeated prisoners dilemma with private monitoring j econ theory 102 2002 40 69 cannot succeed when players private monitoring technologies are sufficiently different we then modify the previous belief based approach by letting the player with smaller observation errors always randomize between cooperate and defect along the cooperative path of the play we show that with vanishing observation errors efficiency and a folk theorem can be approximated using our modified belief based strategies

individual learning and cooperation in noisy repeated games we investigate whether two players in a long run relationship can maintain cooperation when the details of the underlying game are unknown specifically we consider a new class of repeated games with private monitoring where an unobservable state of the world influences the payoff functions and or the monitoring structure each player privately learns the state over time but cannot observe what the opponent learned we show that there are robust equilibria in which players eventually obtain payoffs as if the true state were common knowledge and players played a belief free equilibrium we also provide explicit equilibrium constructions in various economic examples copyright 2014 oxford university press

strategic buyers and privately observed prices a model of finitely repeated price competition between two sellers with differentiated goods and a large buyer is analyzed the set of pure strategy sequential equilibria is investigated under public and private monitoring with private monitoring i e when prices are not observable to the competing sellers all sales are made by the better seller and the set of repeated game equilibrium payoffs coincides with the stage game subgame perfect equilibrium payoffs this is in sharp contrast to the game with perfect monitoring where the folk theorem obtains journal of economic literature classification numbers c72 d43

the folk theorem with imperfect public information the authors study repeated games in which players observe a public outcome that imperfectly signals the actions played they provide conditions guaranteeing that any feasible individually rational payoff vector of the stage game can arise as a perfect equilibrium of the repeated game with sufficiently little discounting the central condition requires that there exist action profiles with the property that for any two players no two deviations one by either player give rise to the same probability distribution over public outcomes the results apply to principal agent partnership oligopoly and mechanism design models and to one shot games with transferable utilities copyright 1994 by the econometric society

a theory of dynamic oligopoly ii price competition kinked demand curves and edgeworth cycles we provide game theoretic foundations for the classic kinked demand curve equilibrium and edgeworth cycle we analyze a model in which firms take turns choosing prices the model is intended to capture the idea of reactions based on short run commitment in a markov perfect equilibrium mpe a firm s move in any period depends only on the other firm s current price there are multiple mpe s consisting of both kinked demand curve equilibria and edgeworth cycles in any mpe profit is bounded away from the bertrand equilibrium level we show that a kinked demand curve at the monopoly price is the unique symmetric renegotiation proof equilibrium when there is little discounting we then endogenize the timing by allowing firms to move at any time subject to short run commitments we find that firms end up alternating thus vindicating the ad hoc timing assumption of our simpler model we also discuss how the model can be enriched to provide explanations for excess capacity and market sharing keiiwords tacit collusion markov perfect equilibrium kinked demand curve edgeworth cycle excess capacity market sharing endogenous timing

on failing to cooperate when monitoring is private abstract i consider a repeated prisoners dilemma where in each period each player receives an imperfect private signal about his opponent s current action i show that when players are patient enough any equilibrium where players use trigger strategies i e do not revert to cooperation once they have started defecting yields players a value arbitrarily close to the mutual minimax i also examine the robustness of the result to perturbations of the game journal of economic literature classification numbers c72

communication in repeated games with imperfect private monitoring this paper examines repeated games in which each player observes a private and imperfect signal on the actions played and in which players are allowed to communicate using public messages providing incentives for players to reveal their observations generates revelation constraints that combined with signal imperfections may be a source of inefficiencies however by delaying the revelation of their observations players may economize on the cost of deterring deviations and thereby avoid these inefficiencies because a player would not want to trigger a sanction that would penalize him too revelation constraints also tend to make sanctions difficult to enforce however with at least three players detecting deviations may not require that all the players reveal their observations in that case we obtain a nash threat version of the folk theorem with two players we do not obtain a similar result nevertheless we show that an efficient outcome can almost always be approximated

private monitoring in auctions abstract we study infinitely repeated first price auctions in which a bidder only learns whether or not he won the object while repetition of the stage game equilibrium is the unique nash equilibrium in public strategies with patient bidders there are simple nash equilibria in private strategies that improve on bid rotation sequential rationality is appropriately captured by essentially perfect bayesian equilibrium epbe which ignores behavior after irrelevant histories our main result is the construction of epbea that improve upon bid rotation assuming symmetry the exclusionary schemes of skrzypacz and hopenhayn tacit collusion in repeated auctions j econ theory 114 2004 153 169 including asymptotically efficient ones are supported as epbea

prices delay and the dynamics of trade we characterize the dynamics of trading patterns and market composition when trade is bilateral finding a trading partner is costly prices are determined by bargaining and preferences are private information we show that equilibrium is inefficient and exhibits delay as sellers price discriminate between buyers with different values as frictions vanish transaction prices are asymptotically competitive and the welfare loss of inefficient trading approaches zero even though the trading patterns continue to be inefficient and delay persists journal of economic literature classification numbers d40 d50

a comparison of regular price cycles in gasoline and liquefied petroleum gas abstract regular and asymmetric gasoline price cycles are observed in a number of countries while most studies found that such price cycles are well characterized by the theoretical edgeworth price cycle some studies suggest alternative explanations this paper contributes to this literature by being the first to compare regular price cycles in a nongasoline product liquefied petroleum gas lpg with gasoline price cycles our main finding is that lpg price cycles in the perth area of western australia are much longer and more asymmetric than gasoline price cycles in the same market this finding is consistent with noel s 2008 prediction that edgeworth cycles are longer and more asymmetric when aggregate demand is more elastic the aggregate demand for lpg is presumably more elastic than the demand for gasoline

comments on money is privacy by charles kahn james mcandrews and william roberds monetary theory and game theory three classes of models on money closely related to game theoretic models are i search theoretic models ii repeated games in a narrow sense and iii trading post games this note tries to point out the sense of affinity between the theory of microfoundations of money and the theory of repeated games in a broad sense of the term

the speed of gasoline price response in markets with and without edgeworth cycles retail gasoline prices are known to respond fairly slowly to wholesale price changes this does not appear to be true for markets with edgeworth price cycles recently many retail gasoline markets in the midwestern u s and in other countries have been shown to exhibit price cycles in which competition generates rapid cyclical retail price movements we show that cost changes in cycling markets are passed on 2 to 3 times faster than in markets without cycles we argue that the constant price movement inherent within the edgeworth cycle eliminates price frictions and allows firms to pass on cost fluctuations more easily

community enforcement of trust with bounded memory we examine how trust is sustained in large societies with random matching when records of past transgressions are retained for a finite length of time to incentivize trustworthiness defaulters should be punished by temporary exclusion however it is profitable to trust defaulters who are on the verge of rehabilitation with perfect bounded information defaulter exclusion unravels and trust cannot be sustained in any purifiable equilibrium a coarse information structure that pools recent defaulters with those nearing rehabilitation endogenously generates adverse selection sustaining punishments equilibria where defaulters are trusted with positive probability improve efficiency by raising the proportion of likely re offenders in the pool of defaulters

a limit characterization of belief free equilibrium payoffs in repeated games abstract the present paper studies repeated games with private monitoring and characterizes the set of belief free equilibrium payoffs in the limit as the discount factor approaches one and the noise on private information vanishes contrary to the conjecture by ely et al j c ely j horner w olszewski belief free equilibria in repeated games econometrica 73 2005 377 415 the equilibrium payoff set is computed by the same formula no matter how many players there are as an application of this result a version of the folk theorem is established for n player prisoner s dilemma games

mixed strategy in oligopoly pricing evidence from gasoline price cycles before and under a timing regulation this paper studies oligopoly firms dynamic pricing strategies in a gasoline market before and after the introduction of a unique law that constrains firms to set price simultaneously and only once per day the observed gasoline pricing behavior both before and under the law is well captured by the edgeworth price cycle equilibrium in the maskin and tirole dynamic oligopoly model my results highlight the importance of price commitment in tacit collusion i also find evidence that the price leadership outcome under the law is better predicted by mixed strategies play than by alternative hypotheses

is more information always better a case in credit markets this paper studies the impact of behavioral and non behavioral information contained in consumer credit reports on the credit market a repeated game of incomplete information between a borrower and a sequence of lenders is considered lenders beliefs regarding the borrower s type depend on the borrower s historical loan performance and other informative signals it is established that for low beliefs strategic defaults occur in equilibrium as the borrower defaults on his loans despite having the ability to repay them further as the ancillary signals become increasingly informative of the borrower s type the range of beliefs over which strategic defaults occur expands this increase in strategic defaults highlights an unintended negative effect of allowing informative signals to influence beliefs on the upside the informative signals allow lenders to learn the borrower s type more quickly

pareto optima and competitive equilibria with adverse selection and moral hazard this paper explores the extent to which standard general equilibrium analysis of pareto optima and of competitive equilibria can be applied to environments with moral hazard and adverse selection problems allowing for lotteries contracts with random components we first establish that an adverse selection insurance economy a moral hazard insurance economy a signaling economy and a private information labor market economy are all special cases of a simple general structure we then show that techniques for characterizing pareto optimal contracts as solutions to concave programming problems are useful and nice and appear to be broadly applicable allowing for lotteries we show how to characterize the optimal allocations for the adverse selection insurance and labor market economies we then show that standard existence and optimality theorems for competitive equilibria apply in the linear space containing lotteries if agents with characteristics which are distinct and privately observed at the time of initial trading enter the economy wide resource constraints in a homogeneous way other kinds of diversity are not critical for economies with moral hazard which satisfy the homogeneity condition competitive contract markets single out a subset of the optima and thus can be consistent with apparent unemployment and with a random allocation of labor supplied though all households are averse to risk the adverse selection insurance and signaling economies however do not satisfy the homogeneity condition and are difficult to decentralize efficiently with a price system

competitive screening under heterogeneous information we study the interplay between informational frictions and second degree price discrimination our theory recognizes that consumers differ in their tastes for quality as well as in the information they possess about available offers which leads to dispersion over price quality menus in equilibrium while firms are ex ante identical we show that their menus are ordered so that more generous menus leave more surplus to consumers of all valuations we explore the cross section of equilibrium menus and variations in market conditions to generate empirical predictions on prices qualities and markups across firms and within a firm s product line for instance more competition may raise prices for low quality goods yet consumers are better off as the qualities they receive also increase the predictions of our model illuminate empirical findings in many markets such as those for cell phone plans yellow pages advertising cable tv and air travel

search with adverse selection this paper analyzes a sequential search model with adverse selection we study information aggregation by the price how close the equilibrium prices are to the full information prices when search frictions are small we identify circumstances under which prices fail to aggregate information well even when search frictions are small we trace this to a strong form of the winner s curse that is present in the sequential search model the failure of information aggregation may result in inefficient allocations

united nations global compact the promise performance gap the united nations global compact ungc was created in 2000 to leverage un prestige and induce corporations to embrace 10 principles incorporating values of environmental sustainability protection of human rights fair treatment of workers and elimination of bribery and corruption we review and analyze the gc s activities and impact in enhancing corporate social responsibility since inception first we propose an analytical framework which allows us to assess the qualities of the ungc and its principles in the context of external and internal elements that influence code effectiveness and implementation second we analyze ungc performance in encouraging companies to become signatory members and bring about demonstrable change in corporate csr sustainability activities in its 10 year report ungc has proclaimed growth in both membership and program activity however all credible and publicly available data and documentation conclusively demonstrate that the ungc has failed to induce its signatory companies to enhance their csr efforts and integrate the 10 principles in their policies and operations the result has been a loss of public trust and support of ungc from important constituencies among civil society organizations and those individuals and groups adversely impacted by corporate activities and resultant negative externalities this diminished credibility has also made ungc largely dependent on the corporate sector for its very survival we conclude that this dependence has in turn impaired and would continue to hinder ungc s ability to fulfill its mission such an outcome raises serious questions as to the viability usefulness and continued existence of ungc

retail gasoline price cycles across spatially dispersed gasoline stations abstract studies of volatility in retail gasoline prices have used either weekly averages of the prices at a small subset of stations in a city or daily observations on prices at a small number of stations this paper uses daily observations on station specific prices within a large canadian metropolitan area to address whether weekly average prices or prices for a small number of stations provide an accurate description of pricing in a market with volatility this paper considers whether researchers using restricted data can draw meaningful conclusions about the appropriate theoretical model and the policy response to allegations of anticompetitive behavior

introduction to repeated games with private monitoring abstract we present a brief overview of recent developments in discounted repeated games with imperfect private monitoring the literature explores the possibility of cooperation in a long term relationship where each agent receives imperfect private information about the opponents actions although this class of games admits a wide range of applications such as collusion under secret price cutting exchange of goods with uncertain quality and observation errors it has fairly complex mathematical structure due to the lack of common information shared by players this is in sharp contrast to the well explored case of repeated games under public information with the celebrated folk theorems and until recently little had been known about the private monitoring case however rapid developments in the past few years have revealed the possibility of cooperation under private monitoring for some class of games journal of economic literature classification numbers c72 c73 d43 d82 l13 l41

money and information this paper investigates the role of money in markets in which producers have private information about the quality of the goods they supply when the fraction of high quality producers in the economy is given money promotes the production of high quality goods which improves the quality mix and welfare unambiguously when this fraction is endogenous however we find that money can decrease welfare relative to the barter equilibrium the origin of this inefficiency is that money provides consumption insurance to low quality producers which can result in a higher fraction of low quality producers in the monetary equilibrium finally we find that most often agents acquire more costly information in the monetary equilibrium than in the barter equilibrium consequently money is welfare enhancing because it promotes useful production and exchange but not because it saves information costs

competitive insurance markets under adverse selection and capacity constraints abstract ever since the seminal work by rothschild and stiglitz q j econom 90 1976 629 on competitive insurance markets under adverse selection the problem of non existence of equilibrium in pure strategies has received much attention in the literature we extend the original analysis by considering firms which face capacity constraints which might be due to limited capital we show that under mild assumptions an equilibrium exists where every consumer obtains his appropriate rothschild stiglitz contract

constrained efficient equilibria in selection markets with continuous types abstract we prove the existence of the constrained efficient miyazaki 1977 wilson 1977 spence 1978 equilibrium in competitive markets with adverse selection when the distribution of unobservable types is continuous our existence proof applies under extremely general assumptions about individual preferences when we restrict preferences to have the widely used in the selection markets literature quasilinear form we characterize the properties of this equilibrium by developing a simple and computationally efficient numerical method for constructing it applying this method we show in a natural setting how one would compute the equilibrium allocation potentially facilitating empirical work using the mws equilibrium we illustrate this empirical application in the context of policy interventions and show that the welfare implications of a coverage mandate critically hinge on whether the market implements a constrained efficient allocation like the mws equilibrium or a constrained inefficient allocation like in azevedo and gottlieb 2017

the repeated prisoner s dilemma with imperfect private monitoring abstract in this paper i study a repeated prisoner s dilemma game in which monitoring is private and imperfect a partial folk theorem is proved for the case of almost perfect monitoring

price leadership and coordination in retail gasoline markets with price cycles abstract this study examines the coordination mechanism used by gasoline stations in the midwestern united states where prices exhibit highly cyclical fluctuations known as edgeworth cycles stations in these markets repeatedly coordinate large marketwide price increases following periods of aggressive price undercutting by studying these periodic price jumps both over time and across cities i find that a particular retail chain in each city acts as a price leader initiating each price restoration the leader signals the new price level to competitors by simultaneously jumping prices at all its stations to a single price competitors follow quickly with a large majority of stations jumping to the exact same price within a 24 hour period the characteristics of the leading firms and the nature of observed price coordination suggest that successful price jumps may be facilitated by the existence of a retailer controlling the prices of a significant number of stations in a city identifying the important role of these firms in the market contributes to a broader understanding of price leadership and coordination and highlights another potential reason why price cycles exist in some in retail gasoline markets and not others

belief based equilibria in the repeated prisoners dilemma with private monitoring abstract we analyze repeated prisoners dilemma games with imperfect private monitoring and construct mixed trigger strategy equilibria such strategies have a simple representation where a player s action only depends upon her belief that her opponent s are continuing to cooperate when monitoring is almost perfect the symmetric efficient outcome can be approximated in any prisoners dilemma game while every individually rational feasible payoff can be approximated in a class of such games the efficiency result extends when there are more than two players it requires that monitoring be sufficiently accurate but does not require very low discounting when a public randomization device is available journal of economic literature classification numbers c73 d82

liquidity misallocation in an over the counter market abstract to understand the illiquidity of the over the counter market when dealers and traders are in long term relationships i develop a framework to study the endogenous liquidity distortions resulting from the profit maximizing screening behavior of dealers the dealer offers the trading mechanism contingent on the aggregate history of his customers summarized by the asset allocation the equilibrium distortion is type dependent trade with small surplus breaks down trade with intermediate surplus may be delayed trade with large surplus is carried out with a large bid ask spread but without delay because of dealers limited commitment the distortions become more severe when the valuation shock is frequent the valuation dispersion is large or the matching friction to form new relationships is large calibrating the model and running a horse race between matching efficiency trading speed and relationship stability i found that the liquidity disruption in the market during the recent financial crisis is more consistent with declining matching efficiency of forming trading relationships the optimal mechanism can be implemented by random quote posting

screening and adverse selection in frictional markets we develop a tractable framework for analyzing adverse selection economies with imperfect competition in our environment uninformed buyers offer a general menu of screening contracts to privately informed sellers some sellers receive offers from multiple buyers while others receive offers from only one buyer as in burdett and judd 1983 this specification allows us to smoothly vary the degree of competition nesting monopsony and perfect competition a la rothschild and stiglitz 1976 as special cases we show that the unique symmetric mixed strategy equilibrium exhibits a strict rank preserving property in that different types of sellers have an identical ranking over the various menus offered in equilibrium these menus can be all separating all pooling or a mixture of both depending on the distribution of types and the degree of competition in the market this calls into question the practice of using the incidence of separating contracts as evidence of adverse selection without controlling for market structure we examine the relationship between exante welfare and the degree of competition and show that in some cases an interior level of frictions maximizes welfare while in other cases competition is unambiguously bad for welfare finally we study the effects of various policy interventions such as disclosure and non discrimination requirements and show that our model generates new and perhaps counter intuitive insights

a walrasian theory of markets with adverse selection the paper describes a walrasian theory of markets with adverse selection and shows how refinements of equilibrium can be used to characterize uniquely the equilibrium outcome equilibrium exists under standard conditions it is shown that under certain conditions a stable set exists and is contained in a connected set of equilibria for generic models there exists a stable outcome that is all the equilibria in the stable set have the same outcome these ideas are applied to markets with one sided and two sided uncertainty under standard monotonicity conditions it is shown that the stable outcome is separating and implies a particular pattern of matches of buyers and sellers

on sustaining cooperation without public observations abstract this paper examines a dynamic game in which each player only observes a private and imperfect signal on the actions played our main result is that in a repeated prisoner s dilemma where defections are irreversible at least for a long enough period of time patient enough players may achieve almost efficient outcomes dealing with models of imperfect private monitoring is difficult because i continuation games are games of incomplete information hence they do not have the same structure as the original game in particular continuation equilibria are correlated equilibria ii players are typically uncertain about their opponents past observations and actions and they use their entire own private history to learn about these actions as a result equilibrium strategies are in general nontrivial and increasingly complex functions of past observations we bypass these difficulties by looking at correlated equilibria of the original game and find correlated equilibria in which the decision problem faced by each player remains the same over time journal of economic literature classification numbers c72

edgeworth cycles revisited some gasoline markets exhibit remarkable price cycles where price spikes are followed by a series of small price declines a pattern consistent with a model of edgeworth cycles described by maskin and tirole we extend the model and empirically test its predictions with a new dataset of daily station level prices in 115 us cities consistent with the theory and often in contrast with previous empirical work we find the least and most concentrated markets are much less likely to exhibit cycling behavior both within and across cities areas with more independent convenience store gas stations are also more likely to cycle

edgeworth price cycles evidence from the toronto retail gasoline market i exploit a new station level twelve hourly price dataset to examine the strong retail price cycles in the toronto gasoline market the cycles appear similar to theoretical edgeworth cycles strongly asymmetric tall rapid and highly synchronous across stations i test a series of predictions made by the theory about how firm behaviors would differentially evolve over the path of a cycle the evidence is consistent with the existence of edgeworth cycles and inconsistent with competing hypotheses while the cycles are an interesting phenomenon for study in their own right the evidence has important policy and welfare implications

the folk theorem for repeated games with observation costs abstract the folk theorem literature has been relaxing the assumption on how much players know about each other s past action here we consider a general model where players can buy precise information every period each player decides whether to pay a cost to accurately observe the actions chosen by other players in the previous period when a player does not pay the cost he obtains only imperfect private signals observational decisions are unobservable to others known strategies such as trigger strategies do not work since they fail to motivate players to pay for information this paper shows that the folk theorem holds for any level of observation costs unlike existing folk theorems with private monitoring ours imposes virtually no restriction on the nature of costless imperfect signals the theorem does not use explicit or costless communication thereby having implications on antitrust laws that rely on evidence of explicit communication the main message is that accurate observation alone however costly enables efficient cooperation in general repeated games

efficiency in repeated prisoner s dilemma with private monitoring abstract this paper analyzes repeated games with private monitoring where in each period each player receives a signal of the other player s action in the previous period and that signal is private information previous literature on discounted repeated games with private monitoring has not shown whether or not nearly efficient equilibria exist for a repeated prisoner s dilemma satisfying a certain assumption regarding stage game payoffs we show that there exists a nearly efficient sequential equilibrium provided that imperfectness of signals is small and players are patient journal of economic literature classification number c73

asymmetric information in bilateral trade and in markets an inversion result abstract i consider bilateral trade between a seller and a buyer with private valuations the seller makes a take it or leave it price offer if the seller observes the buyer s valuation symmetric information bilateral trade is trivially efficient if the seller cannot observe the valuation asymmetric information bilateral trade is inefficient this bilateral trading game is embedded into a large matching market in the steady state equilibrium of the market game the relation between the informational regime and efficiency is inverted with small frictions efficiency obtains if information is asymmetric if information is symmetric however the trading outcome can be very inefficient even if frictions vanish