closing the gap the employment and unemployment effects of minimum wage policy in puerto rico abstract this paper examines the dynamic effect of minimum wage policy on employment and unemployment using multivariate time series techniques the particular minimum wage policy being considered occurred in puerto rico in 1974 when it was decided to close the minimum wage gap between the island and the united states incrementally by 1980 multivariate transfer functions are specified with the intent of distinguishing between minimum wage policy effects and structural changes brought about by the post 1974 recessions the results suggest that minimum wage policy gave rise to more significant unemployment than disemployment effects the pattern of labor mobility supports that suggested by the development literature in which labor flows from uncovered to covered sectors however given the structure of welfare programs on the island it is likely that flows from the covered to the non market sector also took place

real options agency conflicts and optimal capital structure abstract we examine the impact of a stockholder bondholder conflict over the timing of the exercise of an investment option on firm value and corporate financial policy we find that an equity maximizing firm exercises the option too early relative to a value maximizing strategy and we show how this problem can be characterized as one of overinvestment in risky investment projects equityholders incentive to overinvest significantly decreases firm value and optimal leverage and significantly increases the credit spread of risky debt numerical solutions illustrate how the agency cost of overinvestment and its effect on corporate financial policy vary with firm and project characteristics

evaluating natural resource investments notwithstanding impressive advances in the theory of finance over the past 2 decades practical procedures for capital budgeting have evolved only slowly the standard technique which has remained unchanged in essentials since it was originally proposed see dean 1951 bierman and smidt 1960 derives from a simple adaptation of the fisher 1907 model of valuation under certainty under this technique expected cash flows from an investment project are discounted at a rate deemed appropriate to their risk and the resulting present value is compared with the cost of the project this standard textbook technique reflects modern theoretical developments only insofar as estimates of the discount rate may be obtained from crude application of single period asset pricing theory but see brennan 1973 bogue and roll 1974 turnbull 1977 constantinides 1978 the inadequacy of this approach to capital budgeting is widely acknowledged although not widely discussed its obvious deficiency is its the evaluation of mining and other natural resource projects is made particularly difficult by the high degree of uncertainty attaching to output prices it is shown that the techniques of continuous time arbitrage and stochastic control theory may be used not only to value such projects but also to determine the optimal policies for developing managing and abandoning them the approach may be adapted to a wide variety of contexts outside the natural resource sector where uncertainty about future project revenues is a paramount concern

flexible and risk sharing supply contracts under price uncertainty we study supply contracts for deterministic demand but in an environment of uncertain prices we develop valuation methodologies for different types of supply contracts a time inflexible contract requires the firm to specify not only how many units it will purchase but also the timing of the purchase a time flexible contract allows the firm to specify the purchase amount over a given period of time without specifying the exact time of purchase other than time flexibility the suppliers may offer quantity flexibility to the firm as well i e purchase quantities could be within a prespecified quantity window finally risk sharing features can be incorporated in the contract in terms of the purchase price that the firm eventually pays to a supplier within a prespecified price window the firm pays the realized price but outside of it the firm shares in an agreed way added costs or benefits given the structure of a supply contract we study the firm s decision when to purchase and how many units in each purchase such that the expected net present value of the purchase cost plus inventory holding cost is minimized we discuss optimal purchasing strategies for both time flexible and time inflexible contracts with risk sharing features other interesting results include the analysis of two supplier sourcing environments and the exploitation of quantity flexibility in such contracts our discussion illustrates how time flexibility quantity flexibility supplier selection and risk sharing when carefully exercised can effectively reduce the sourcing cost in environments of price uncertainty

threshold cointegration between inflation and us capacity utilization abstractan analogue to the phillips curve shows a positive relationship between inflation and capacity utilization some recent empirical work has shown that this relationship has broken down when using data after the mid 1980s we empirically investigate this issue using several threshold error correction models we find in the long run a 1 increase in the rate of inflation leads to approximately a 0 0046 increase in capacity utilization the asymmetric error correction structure shows that changes in capacity utilization show significant corrective measures only during booms while changes in inflation correct during both phases of the business cycle with the corrections being stronger during recessions we also find that in the short run changes in the inflation rate do granger cause capacity utilization while changes in capacity utilization do not granger cause inflation the granger causality from inflation to capacity utilization can be interpreted as supporting recent calls made in the popular

a multisectoral framework for the analysis of labor mobility and development in ldcs an application to postwar puerto rico the multisectoral framework of this study centers on the notion of dualism of a regional and technological nature 6 sectors are highlighted and disaggregated by location of economic activity and form of organization formal versus informal and rural versus urban the descriptive framework is applied to the special case of puerto rico and its experience with industrial development between 1950 and 1980 section i examines the multisectoral dualistic framework within the context of development theory and as a tool for identifying labor markets and labor mobility in developing countries section ii discusses methodological issues that provide a basis for estimating employment and earnings within a multisectoral framework section iii presents sectoral estimates of employment and earnings in puerto rico between 1950 and 1980 section iv considers possible extensions of the analysis and an assessment of the usefulness of the framework for understanding labor markets in economic development changes in sectoral estimates of employment and earnings in puerto rico between 1950 and 1980 have been dramatic this is consistent with an industrialization 1st development strategy the interdependency between urban formal and informal labor markets may be increasing declines in real urban informal sector earnings in the face of high and stable open unemployment are consistent with the view that informal temporary employment and formal job search are complementary activities the unexpected finding of this study is that the relative size of employment and earnings in the urban informal sector in puerto rico has declined with industrial expansion

renegotiation design with unverifiable information this paper considers a buyer seller relationship with observable but unverifiable investments and or random utility parameters in such situations it is known that contract renegotiation may prevent the implementation of first best outcomes in this paper we show however that efficient investments and optimal risk sharing can typically be achieved provided the initial contract is able to monitor the ex post renegotiation process specifically we focus on the following two features of renegotiation design first default options in case renegotiation breaks down second the allocation of all bargaining power to either contracting party moreover we show that these two features can be obtained in standard rubinstein bargaining games through contractual provisions such as specific performance clauses and penalties for delay or equivalently financial hostages refundable without interest

the interaction of debt financing cash grants and the optimal investment policy under uncertainty abstract significant progress has been made toward understanding a levered firm s optimal investment policy under uncertainty to date however not much work has concentrated on the time scale trade off and collectively held real options we employ a game theoretic real option model between a firm and a government to analyze the effect of uncertainty and investment stimulus in the form of cash grants on optimal investment timing financing and investment scaling we find that the jointly held real option between the firm and the government leads to underinvestment regardless of whether the firm has the possibility to issue debt subsidies however reduce the level of underinvestment notably the results indicate that even though levered firms receive less support they invest more than unlevered firms this challenges recent findings that a firm s optimal investment level is not affected by the way it finances a project similarly we find that for realistic parameter constellations the levered firm s optimal investment threshold can be higher than that of its unlevered counterpart this indicates that the availability of tax shield benefits does not necessarily serve as an incentive to invest earlier finally we show that the effect of cash flow uncertainty on the equilibrium level of grants is ambiguous and triggers the switch from a subsidy to non subsidy regime

vertical integration and firm boundaries the evidence since ronald h coase s 1937 seminal paper a rich set of theories has been developed that deal with firm boundaries in vertical or input output structures in the last twenty five years empirical evidence that can shed light on those theories also has been accumulating we review the findings of empirical studies that have addressed two main interrelated questions first what types of transactions are best brought within the firm and second what are the consequences of vertical integration decisions for economic outcomes such as prices quantities investment and profits throughout we highlight areas of potential cross fertilization and promising areas for future work

optimal sequential investment when capital is not readily reversible when investment opportunities arrive one at a time and are reviewed sequentially a corporation s optimal policy differs from a standard net present value rule if the corporation exercises control over an industry state variable and control is costly the first condition presupposes a degree of market power for the firm the second occurs if corporate investment decisions are imperfectly reversible to address the problem of optimal investment in this context a firm s investment decisions are modeled as a markov reward process the causes of economic irreversibility are discussed and general propositions concerning the optimal investment policy are derived these propositions are then applied to the optimization of an exploration program by an oligopolistic firm a price leader under particular demand and distributional assumptions solutions for the optimal decision rule and the value of the exploration program are obtained and their properties examined current investment may affect future opportunities by creating growth opportunities as defined by myers 16 see also spence 25 or by reducing the value of an existing opportunity set despite the known potential for these interactions capital budgeting techniques such as net present valuation scenario planning and monte carlo simulation focus exclusively on the stand alone value of an investment the capacity for modeling interactions is present in the multiperiod models of merton 16 bogue and roll 5 and others the absence of applications however is evidence that actual economic interactions between current and future opportunities are not well understood this paper develops a model of a firm facing a sequence of interdependent growth opportunities opportunities have positive net present values because the firm exercises market power in its product market current investment changes the value of future opportunities through its effect on a product market variable the model is used to examine the impact of demand industry structure and technology on optimal investment rules and on the value of aggregate growth

adjustment costs uncertainty and the behavior of the firm this paper examines the effects of demand and cost uncertainty on a firm s investment output and pricing decisions but unlike most earlier studies in which demand and cost are simply not known at the time an output or pricing decision is made here i consider uncertainties over future demand and costs it will be seen that the effects of such uncertainties depend critically on the characteristics of the firm s adjustment costs i treat demand uncertainty in a dynamic context by letting the market demand function shift randomly but continuously through time according to a stochastic process this means that today s demand is known exactly but future demand may be larger or smaller and has a variance that increases with the time horizon likewise uncertainty over factor costs is characterized by treating those variables as stochastic processes i combine this characterization of uncertainty with a dynamic model of the firm in which some factor inputs can be adjusted freely in response to stochastic demand changes but other factors are quasi fixed in that adjustment costs are incurred when they are changed in this model the firm s price and output are random processes but we can examine the firm s behavior in expected value terms of interest is whether the presence of uncertainty should cause competitive or monopolistic firms to invest and produce more or less than they would otherwise how the effects of uncertainty are influenced by the presence of risk aversion and how the use of inventories can alter the impact of uncertainty on capacity and sales of course these questions have been addressed by others in the past among the earliest studies of demand uncertainty are those of edwin mills 1959 1962 and samuel karlin and charles carr 1962 mills examined a single period monopolistic firm that sets both output and price and showed that additive demand uncertainty i e the demand function is of the form q q p u where u is a random variable leads to a lower price if marginal cost is constant so that the firm reduces the expected loss from discarding unsold production karlin and carr confirmed for both the static case and the multiperiod case with inventory carryover that additive uncertainty tends to reduce the price and increase the output of a risk neutral firm while multiplicative uncertainty does the opposite other papers have been concerned with the way in which the error term enters the demand function additively multiplicatively or nonlinearly the implications of choosing price ex ante instead of output the implications of risk aversion and the use of inventories for example agnar sandmo 1971 and david baron 1970 showed that a risk averse competitive firm will produce less when the price is a random variable or subject to an additive error term but a riskneutral firm will not alter its production hayne leland 1972 extended these results to a monopolistic firm whose demand can depend in a general way on a random error term for example q q p u and showed that uncertainty reduces the production of a

impact of licensing on investment and financing of technology development technology innovations continue to be one of the greatest drivers of economic growth realizing the value of such innovations however requires substantial follow on investments in development and commercialization the value of these investments is difficult to capture because of uncertain demand and potential competition this often leads to difficulties in obtaining outside financing for these investments in this paper we explore how licensing contracts can both dissuade other firms from developing alternative technologies and alleviate the financing problem we develop a model in which a firm that invests in the development efforts of an innovation can license its technology to a potential competitor a variety of licensing possibilities is considered including fixed fees royalty schedules and two part licenses consisting of an up front payment and a capped royalty schedule when the firm has no financial constraint a royalty schedule that depends on realized demand dominates a fixed fee per license when investment funds are constrained a royalty cap license with an up front payment can serve as a source of financing we also study the investment problem conditional on the licensing and financing decisions

the intensity and timing of investment the case of land the authors model the decision to replace durable capital when intensity is variable decisions of this type include land redevelopment decisions where the density of residential or commercial development is a choice variable as well as capital replacement decisions where capacity is variable the authors provide a general yet simple formation of the problem using an optimal stopping framework they characterize the value of the project the timing of investment and the intensity of development the authors show that intensity interacts in important ways with timing taxes and project values the ability to vary intensity raises hurdle rents and delays development decisions copyright 1994 by american economic association

does asymmetry of international shocks matter for the u s business cycle this article proposes and investigates the asymmetry hypothesis which predicts that an international asymmetric shock tends to have a stronger and longer effect on the u s business cycle than a symmetric shock the hypothesis finds empirical support in the impulse responses of u s output and inflation to symmetric and asymmetric shocks those responses are estimated in a four variable structural vector autoregression the hypothesis also finds support in stylized facts the longest u s expansions have tended to occur when the rest of the world was growing below potential jel e3 e5 e4 i introduction economic expansions in the united states since world war ii have tended to end with the same pattern as the economy approaches capacity wage and price inflation begins to rise the federal reserve then tightens monetary policy to dampen inflationary pressures thereby pushing the economy into a recession 1 the expansion that ended in march 2001 however appeared to deviate from this pattern it was associated with little inflationary build up and consequently the federal reserve did not begin a string of uninterrupted tightening until late june 1999 when consumer price index cpi inflation was running only slightly above the 2 rate by comparison consumer prices were rising at 6 2 at the end of the 1960s boom and over 5 at the end of the 1980s boom clearly the monetary tightening of 1999 was enacted more in reaction to the threat of inflation in light of the tight labor market than to actual high inflation what made the 1990s expansion different a number of explanations have been offered for the longevity of the latest expansion that the credit markets have played an important role in sustaining the current expansion 2 that greater fiscal discipline and enhanced central bank credibility have helped tame inflation expectations and sustain the boom that the rise in the services component of gross domestic product gdp relative to manufacturing and more efficient inventory management have contributed to rendering the economy less susceptible to cyclical swings that the increase in productivity growth caused by digital technology has helped meet increases in demand and labor shortages without driving up inflation or that globalization per se has helped prolong the expansion this article considers another factor that is likely to have helped increase the longevity of the 1990s expansion we call this factor the asymmetry hypothesis the hypothesis maintains that in a flexible exchange rate regime an asymmetric that is country specific shock will have a stronger and longer effect on output than will a shock that also hits the rest of the world the hypothesis makes two assumptions that the united states is sufficiently integrated with the rest of the world or globalized and that the federal reserve is forward looking and at least partly effective in combating inflation and recessions under those assumptions an expansion caused by a symmetric positive shock is accompanied by stronger inflationary pressures than an expansion caused by an equal sized asymmetric shock prompting quicker and stronger monetary tightening consequently an expansion caused by a symmetric shock ends earlier than one caused by an asymmetric shock symmetrically a contraction caused by a symmetric negative shock is potentially more devastating for the economy than one caused by an equal sized asymmetric shock prompting quicker and stronger monetary easing thus a contraction caused by a symmetric shock ends earlier than a contraction caused by an asymmetric shock this article builds a two country open economy model to illustrate why the hypothesis makes sense in an age of globalization and a forward looking monetary regime it then estimates a structural vector autoregression svar system using both long run and short run restrictions to investigate whether the hypothesis can stand the scrutiny of empirical study

real options with ex post division of the surplus abstract this paper examines a real option model where two vertically related firms are involved in a specific investment project that is subject to an uncertain payoff while ex post bargaining between a seller and a buyer leads to underinvestment by the seller in a standard model where timing of the seller s investment is exogenous we show that this need not be the case when the seller s timing of investment is endogenous however bargaining with a buyer leads to excessive waiting more severe holdup and higher uncertainty will lead to vertical integration of activities to avoid timing inefficiencies

investment uncertainty and pre emption this paper examines irreversible investment in a project with uncertain returns when there is an advantage to being the first to invest and externalities to investing when others also do so we show that the possibility of pre emption can have significant qualitative and quantitative effects on the relationship between uncertainty and investment in a single agent real options model the trigger threshold for investment increases without bound as uncertainty grows in contrast the investment trigger of a leader faced with pre emption is bounded above as uncertainty increases in fact we show that under certain parameter values greater uncertainty can lead the leader to invest earlier these findings reinforce the importance of extending real options analysis to include strategic interactions between players applications to industry situations are also discussed

option valuation of claims on real assets the case of offshore petroleum leases this paper extends financial option theory by developing a methodology for the valuation of claims on a real asset an offshore petroleum lease several theoretical and practical problems not present in applying option pricing theory to financial assets are addressed most importantly we show the necessity of combining option pricing techniques with a model of equilibrium in the market for the underlying asset petroleum reserves the advantages of this approach over conventional discounted cash flow techniques are emphasized the methodological development provides important insights for both company behavior and government policy promising empirical results are reported

does global slack matter more than domestic slack in determining u s inflation abstract this paper employs a structural model to estimate whether global output gap has become an important determinant of u s inflation dynamics the results provide support for the relevance of global slack as a determinant of u s inflation after 1985

erm bandwidths for emu and after evidence from foreign exchange options ems credibility exchange rate expectations implied by derivatives prices are the wide bands adopted in the summer of 1993 too large the official answer is that wide bands offer a protection against speculative pressure while exchange rates may be kept within narrower margins at the discretion of the authorities yet if exchange rate fixity and predictability are desirable as implicitly assumed by the mere existence of the system there must exist a trade off between protection against speculative pressure and predictability in that case the bandwidth chosen should be as narrow as possible and yet unlikely to be challenged by the markets this paper offers estimates of safe bandwidths for the long term member currencies french franc peseta danish krone and escudo the existing 15 bands are found to be unnecessarily wide narrower 3 5 bands would capture at least 95 of expected exchange rate realizations over a three month horizon for the lira finnish markka and swedish krone wider bands of 5 6 would capture a similar amount of the exchange rate distribution the pound s exchange rate expectations are the most dispersed requiring 8 4 bands to capture 95 of exchange rate expectations jose m campa p h kevin chang and robert l reider

the stochastic city abstract this paper analyzes a simple model of an urban area with growth and uncertainty household income rents and prices for land follow stochastic processes even though investors are risk neutral uncertainty affects both land rents and land prices in equilibrium because the conversion of land from agricultural to urban use is irreversible growth on the other hand affects urban and agricultural land prices but not the level of rents we show that uncertainty i delays the conversion of land from agricultural to urban use ii imparts an option value to agricultural land iii causes land at the boundary to sell for more than its opportunity cost in other uses and iv reduces equilibrium city size

has the rise in globalization reduced u s inflation in the 1990s juann h hung this article investigates whether increased globalization of the u s economy has helped hold down inflation in the 1990s based on several measures we find that globalization has increased further we find that import prices exert a greater impact on prices of products in industries faced with greater import penetration high foreign excess capacity accounts for much of the recent decline in u s inflation our results suggest that the decline in inflation is explained by the interaction of increased globalization and high excess foreign capacity globalization by itself does not lead to less inflation just greater sensitivity to foreign economic conditions jel e3 i introduction has the rise in globalization helped reduce u s inflation in the 1990s two hypotheses have been proposed for how the rise in globalization may have held down inflation the first is the so called competing goods effect hypothesis which contends that greater competition from foreign producers has limited the ability of domestic producers to raise prices the second hypothesis maintains that excess capacity abroad has helped u s manufactures meet the robust domestic demand in the united states without straining domestic resources and pushing up inflationary pressures this article first lays out a general framework that integrates these two hypotheses and then investigates each of them empirically we find evidence in support of both hypotheses to examine the competing goods effect hypothesis we estimate panel data regressions to find whether import prices have indeed exerted a greater impact on product prices in industries that are faced with greater import penetration the results are affirmative we study the second more general hypothesis by making two inquiries first has the rise in globalization coincided with the breakdown of the traditional phillips curve s ability to predict inflation that began in the early 1990s that is has the united states become considerably more open in the 1990s than in previous years when the phillips curve tracked inflation with reasonable accuracy second has foreign capacity utilization played an important role along with traditional explanatory variables in predicting inflation our empirical evidence suggests that the answers to both inquires are also positive most striking is the finding that by including foreign capacity utilization in the estimation of a phillips curve equation almost all of the missing inflation the difference between actual inflation and predicted inflation based on the traditional phillips curve since 1994 disappears our findings suggest that the interaction of slack foreign economic conditions and greater openness to trade may have helped tame the u s inflation in the 1990s but globalization alone has not permanently reduced the threat of recession or inflation indeed greater globalization may even help increase inflation when the u s and foreign economic expansions are synchronized no single researcher has looked at all of the questions posed in this article but each question has been investigated separately before krugman 1994 1995 and irwin 1996 have looked at whether the united states has become more globalized over the past decade they find that trade with the rest of the world is not a significant or rapidly growing influence on the u s economy the question of whether prices of foreign goods influence domestic prices through the competing goods effect has been investigated by swagel 1997 he finds a statistically significant but small impact in 10 of the 19 industries in his sample similarly slaughter and swagel 1997 find that increased globalization has had only a modest impact on wages in industrialized economies finally orr 1994 and tootel 1998 find very little or no impact of foreign capacity utilization on domestic inflation

contracting on time the paper shows how the time considerations especially those concerning contract duration affect incomplete contract theory time is not only a dimension along which the relationship unfolds but also a continuous verifiable variable that can be included in contracts we consider a bilateral trade setting where contracting investment trade and renegotiation take place in continuous time we show that efficient investment can be induced either through a sequence of constantly renegotiated fixed term contracts or through a renegotiation proof evergreen contract a perpetual contract that allows unilateral termination with advance notice we provide a detailed analysis of properties of optimal contracts

how has globalisation affected inflation in china this paper investigates how globalisation has affected inflation in china we estimated standard phillips curve inflation equations and examined whether globalisation has affected the structure of inflation dynamics as captured by the phillips curve empirical results suggest that the globalisation of the chinese economy has changed the behaviour of inflation dynamics in particular the impact of domestic and global output gaps on domestic inflation in china has changed significantly since 1994 before 1994 the domestic output gap was a major factor in driving domestic inflation after 1994 however the global output gap plays a significant and more important role in affecting domestic inflation the finding implies that chinese monetary authorities should specifically take into account the developments in global output in their monetary policymaking process

investment and demand uncertainty this paper investigates the effects of uncertainty on the investment decisions of a sample of italian manufacturing firms using information on the subjective probability distribution of future demand for firms products according to the entrepreneurs the results support the view that uncertainty weakens the response of investment to demand thus slowing down capital accumulation consistent with the predictions of the theory there is considerable heterogeneity in the effect of uncertainty on investment it is stronger for firms that cannot easily reverse investment decisions and for those with substantial market power we show that the negative effect of uncertainty on investment cannot be explained by uncertainty proxying for liquidity constraints

choosing among alternative discrete investment projects under uncertainty abstract irreversible choice among mutually exclusive projects under output price uncertainty is considered increasing returns are shown to make it optimal to wait for the largest project greater uncertainty of the price process makes it optimal to wait for a larger project

incomplete contracts specific investments and risk sharing an optimal contract design problem is considered contracts which are incomplete and simple are used to investigate the extent to which constrained revisions can mitigate inefficiencies resulting from contractual incompleteness an optimal contract is characterized in two cases first when a contract is being used to facilitate trade between two risk neutral parties who must make relationship specific investments it is possible to implement the first best by a simple contract second when a contract is being used to share risk it is generally not possible to implement the first best when one party is risk neutral however it is possible to implement the first best by assigning all the ex post decision rights to that party

a multiple time series analysis of labor supply and earnings in economic development abstract using multivariate time series techniques the dynamics of male and female labor supply and earnings in puerto rico are examined during a period of rapid economic developemnt 1953 1978 the temporal analysis suggests that aggregate male and female labor force participation rates are exogenous to male and female earnings in addition continous declines in male participation have been partly responsible for increases in both male and female earnings and a narrowing of relative earnings differentials the study also finds that the advent of the food stamp program in 1975 has resulted in a small reduction in male labor force participation moreover the inclusion of food stamps as an intervention component is quite useful in forecasting the male participation rate the forecasting accuracy of univariate and multivariate models is assessed with the result that in every instance the multivariate transfer functions prove superior overall the results support the incorporation of multiple time series in econometric studies of developing countries and provide evidence of its usefullness for development planning and policy

determinants of vertical integration an empirical test this paper tests models of vertical integration with emphasis on incentives that arise from transactions costs and demand variability the tests are based on a logit analysis of firms backward integration choices in a sample of thirty four chemical products the results are consistent with recent transactions cost theories and the demand variability model proposed by carlton 1979 copyright 1991 by blackwell publishing ltd

hold up and sequential specific investments we explore the hold up problem when parties can make investments simultaneously or sequentially sequencing of investments can allow some projects to proceed that would not be feasible with a simultaneous regime however a cost of sequencing is that it can disadvantage some parties reducing their incentive to invest the mere possibility of sequential investment can prevent trade from occurring this can be interpreted as a new form of hold up if both parties prefer to invest second as the number of potential investment periods is increased the subgame perfect equilibrium can switch between a prisoners dilemma and a coordination game