learning to trust in indefinitely repeated games abstract although it is well known that trust and trustworthiness i e the fulfillment of trust are important behaviors for the fulfillment of incomplete contracts less is known about how the economic environment influences them in this paper we design an experiment to examine how exogenously determined stochastic past relationship lengths affect trust and trustworthiness in new relationships we find that shorter lasting relationships have an immediate negative impact on both behaviors in the relationships that immediately follow while longer lasting relationships have the opposite effect the effect of stochastic end points declines for trustworthiness but not for trust as subjects gain experience indicating that trust is able to rebound when longer lasting relationships follow shorter lasting ones

quality and accountability in health care delivery audit study evidence from primary care in india we present unique audit study evidence on health care quality in rural india and find that most private providers lacked medical qualifications but completed more checklist items than public providers and recommended correct treatments equally often among doctors with public and private practices all quality metrics were higher in their private clinics market prices are positively correlated with checklist completion and correct treatment but also with unnecessary treatments however public sector salaries are uncorrelated with quality a simple model helps interpret our findings where public sector effort is low the benefits of higher diagnostic effort among private providers may outweigh costs of potential overtreatment

women as policy makers evidence from a randomized policy experiment in india this paper uses political reservations for women in india to study the impact of women s leadership on policy decisions since the mid 1990 s one third of village council head positions in india have been randomly reserved for a woman in these councils only women could be elected to the position of head village councils are responsible for the provision of many local public goods in rural areas using a dataset we collected on 265 village councils in west bengal and rajasthan we compare the type of public goods provided in reserved and unreserved village councils we show that the reservation of a council seat affects the types of public goods provided specifically leaders invest more in infrastructure that is directly relevant to the needs of their own genders

politics and public goods in developing countries evidence from the assassination of rajiv gandhi abstract this paper employs an instrumental variables strategy to identify the effect of party ideology on policy outcomes exogenous variation in party representation is generated by the assassination of the leader of the congress party which occurred midway through india s national elections in 1991 and dramatically increased the probability of congress victory for a subset of constituencies representation by the congress party leads to a substantial increase in the provision of public goods favored by the poor consistent with the party s expressed populist agenda among the salient changes are increases in the availability of drinking water and primary education and declines in agricultural and industrial electrification and telephone coverage i compare these effects to those obtained using a regression discontinuity design and find that the latter yields little effect of congress representation on public goods allocations

determinants of redistributive politics an empirical analysis of land reforms in west bengal india we investigate political determinants of land reform implementation in the indian state of west bengal using a village panel spanning 1974 1998 we do not find evidence supporting the hypothesis that land reforms were positively and monotonically related to control of local governments by a left front coalition vis vis the right centrist congress party combined with lack of commitment to policy platforms instead the evidence is consistent with a quasi downsian theory stressing the role of opportunism reelection concerns and electoral competition jel d72 013 017 q15

estimating the impact of the hajj religion and tolerance in islam s global gathering we estimate the impact on pilgrims of performing the hajj pilgrimage to mecca our method compares successful and unsuccessful applicants in a lottery used by pakistan to allocate hajj visas pilgrim accounts stress that the hajj leads to a feeling of unity with fellow muslims but outsiders have sometimes feared that this could be accompanied by antipathy toward non muslims we find that participation in the hajj increases observance of global islamic practices such as prayer and fasting while decreasing participation in localized practices and beliefs such as the use of amulets and dowry it increases belief in equality and harmony among ethnic groups and islamic sects and leads to more favorable attitudes toward women including greater acceptance of female education and employment increased unity within the islamic world is not accompanied by antipathy toward non muslims instead hajjis show increased belief in peace and in equality and harmony among adherents of different religions the evidence suggests that these changes are likely due to exposure to and interaction with hajjis from around the world rather than to a changed social role of pilgrims upon return

imperfect choice or imperfect attention understanding strategic thinking in private information games to understand the thinking process in private information games we use mousetracking to record which payoffs subjects attend to the games have three information states and vary in strategic complexity subjects consistently deviate from nash equilibrium choices and often fail to look at payoffs which they need to in order to compute an equilibrium response choices and lookups are similar when stakes are higher when cluster analysis is used to group subjects according to lookup patterns and choices three clusters appear to correspond approximately to level 3 level 2 and level 1 thinking in level k models and a fourth cluster is consistent with inferential mistakes as for example in qre or cursed equilibrium theories deviations from nash play are associated with failure to look at the necessary payoffs the time durations of looking at key payoffs can predict choices to some extent at the individual level and at the trial by trial level

evolution and information in a gift giving game abstract we examine the stochastic stability of a process of learning and evolution in a gift giving game overlapping generations of players are randomly matched to play the game they may consult information systems to learn about the past behavior of their opponents if the value of the gift is smaller than twice the cost then gifts are not given if the value of the gift is more than four times the cost then gifts are exchanged moreover in the stochastically stable equilibrium a unique information system is selected to support cooperation journal of economic literature classification numbers c62 c72 d83

cooperative strategies in anonymous economies an experiment we study cooperation in economies of indefinite duration participants faced a sequence of prisoner s dilemmas with anonymous opponents we identify and characterize the strategies employed at the individual level we report that i grim trigger does not describe well individual play and there is wide heterogeneity in strategies ii systematic defection does not crowd out systematic cooperation iii coordination on cooperative strategies does not improve with experience we discuss alternative methodologies and implications for theory

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

signaling and election motivations in a voting model with common values and responsive candidates in this paper we focus on strategic voting behavior when both an election and a signaling motivation affect voters behavior we analyze a model of elections with two candidates competing on a one dimensional policy space voters are privately and imperfectly informed about a common shock affecting the electorate s preferences candidates are assumed to choose policy in response to information gleaned from election results and according to exogenous factors that may lead to polarization in candidates policy choices we analyze a subset of symmetric equilibria in which strategies are symmetric to candidates names and private signals css equilibria we show that signaling and election motivations pull voters to vote in different directions we provide conditions that show the relation between the amount of information aggregated in the election and the motivation that influences voting behavior the most finally we show that when candidates are responsive and polarized all css equilibria are inefficient in the limit

fines leniency and rewards in antitrust this article reports results from an experiment studying how fines leniency and rewards for whistleblowers affect cartel formation and prices antitrust without leniency reduces cartel formation but increases cartel prices subjects use costly fines as punishments leniency improves antitrust by strengthening deterrence but stabilizes surviving cartels subjects appear to anticipate the lower postconviction prices after reports leniency with rewards prices fall at the competitive level overall our results suggest a strong cartel deterrence potential for well run leniency and reward schemes these findings may also be relevant for similar white collar organized crimes such as corruption and fraud

equilibrium selection in static and dynamic entry games abstract we experimentally assess the predictive power of two equilibrium selection principles for binary n player entry games with strategic complementarities in static entry games we test the theory of global games which posits that players play games of complete information as if they were playing a related global game of incomplete information by contrast in dynamic n period entry games the efficient subgame perfect equilibrium prediction is for all to enter whenever the payoff relevant state variable exceeds a certain threshold the subgame perfect entry threshold of the dynamic game will generally differ from the global game threshold of the static version of the same game nevertheless our experimental findings suggest that entry thresholds are similar between static and dynamic versions of the same game an implication is that the modeling of entry games with strategic complementarities as static one shot games ignoring the dynamic element of such interactions may not be unreasonable

learning and risk aversion we study how learning shapes behavior towards risk when individuals are not assumed to know or to have beliefs about probability distributions in any period the behavior change induced by learning is assumed to depend on the action chosen and the payoff obtained we characterize learning processes that in expected value increase the probability of choosing the safest actions and provide sufficient conditions for them to converge to the choices of risk averse expected utility maximizers we provide a learning theoretic motivation for long run risk choices such as those in expected utility theory with known payoff distributions

the evolutionary stability of cooperation is cooperation without central authority stable if so how robust is it despite what might be the conventional wisdom the evolution of cooperation did not solve this problem deductively in fact results obtained later by others seem to have contradicted the book s main message reexamining this exceptionally influential work yields a new picture part of axelrod s evolutionary story turns out to be false but the main intuition that retaliatory strategies of conditional cooperation are somehow advantaged proves correct in one specific and significant sense under a standard evolutionary dynamic these strategies require the minimal frequency to stabilize hence they support the most robust evolutionary equilibrium the easiest to reach and retain moreover the less efficient a strategy the larger is its minimal stabilizing frequency hobbesian strategies of pure defection are the least robust our main theorems hold for a large class of games that pose diverse cooperation problems prisoner s dilemma chicken stag hunt and many others

unique equilibrium in a model of self fulfilling currency attacks even though self fulfilling currency attacks lead to multiple equilibria when fundamentals are common knowledge we demonstrate the uniqueness of equilibrium when speculators face a small amount of noise in their signals about the fundamentals this unique equilibrium depends not only on the fundamentals but also on financial variables such as the quantity of hot money in circulation and the costs of speculative trading in contrast to multiple equilibrium models our model allows analysis of policy proposals directed at curtailing currency attacks

an experimental test of the efficacy of a simple reputation mechanism to solve social dilemmas abstract the evolution of cooperation has been the focus of intense research in the social sciences natural sciences especially biology and even computer science it has long been recognized that the possibility of future consequences is crucial to the emergence of rational cooperation it was thought that random matching was isomorphic to one shot play but kandori 1992 showed that a reputation labeling mechanism can be used to support cooperation in the random matching prisoner dilemma we designed an experiment to test this result we found that while the level of cooperation steadily declined without a reputation mechanism with our color coded reputation mechanism the level of cooperation steadily increased with experience an econometric mixture model consisting of four reputation conditioned strategies as well as a level 0 type was fitted to the data we cannot reject the hypothesis that the majority of subjects used one of these strategies and learned with experience

the evolution of cooperation through imitation we study evolutionarily stable outcomes for a class of games that admit cooperation and conflict as possible nash equilibria we make use of two ideas existing strategies are more likely to be imitated than new strategies are to be introduced players are able to identify opponents behavior prior to interaction the long run evolutionary limit is efficient for the case of perfect recognition of opponents behavior for the case of imperfect recognition efficiency is not achieved and long run outcomes are more efficient the more accurate is the information strategies that emerge in the long run are those where players reward opponents who are likely to play the same way and punish opponents who are likely to play differently

coordination under limited depth of reasoning this paper provides the first unified explanation of behavior in coordinated attack games under both public and private information it demonstrates that the main experimental results such as threshold strategies comparative statics and the differences in behavior under public and private information are robust predictions of limited depth of reasoning models this is in contrast to equilibrium which mispredicts the coordinating roles of public and private information the analysis has implications for understanding macroeconomic phenomena like currency attacks and debt crises which are commonly modeled using incomplete information coordinated attack games

balanced budget redistribution as the outcome of political competition this paper models balanced budget redistribution between socio economic groups as the outcome of electoral competition between two political parties equilibrium is unique in the present model and a sufficient condition for existence is given requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate the validity of hotelling s principle of minimum differentiation and of director s law are examined under alternative hypotheses concerning administrative costs of redistributions and voter s possibilities both of abstaining from voting and of becoming campaign activists for one of the parties the policy strategy of expected plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality incomes are fixed and known so lump sum taxation is feasible however constraints on tax transfer differentiation between individuals are permitted in the analysis

the political economy of public goods some evidence from india we are interested in how public goods get allocated by a centralized state we use data on public goods and social structure from parliamentary constituencies in rural india to understand the allocation of these goods over the 1970s and 1980s national policies and political agendas during this period emphasized universal access to basic amenities and financed a rapid expansion in rural infrastructure we find evidence of considerable equalization in many of these facilities reflecting perhaps the importance of these commitments among the historically disadvantaged social groups those that mobilized themselves politically gained relative to the others measures of social heterogeneity that have been emphasized in the recent empirical literature on public goods are relevant but not overwhelming in their importance

the heterogeneous impact of conditional cash transfers the honduran praf experiment randomly assigned conditional cash transfers to 40 of 70 poor municipalities within five strata defined by a poverty proxy using census data we show that eligible children were 8 percentage points more likely to enroll in school and 3 percentage points less likely to work the effects were much larger in the two poorest strata and statistically insignificant in the other three the latter finding is robust to the use of a separate regression discontinuity design heterogeneity confirms the importance of judicious targeting to maximize the impact and cost effectiveness of ccts there is no consistent evidence of effects on ineligible children or on adult labor supply

can mandated political representation increase policy influence for disadvantaged minorities theory and evidence from india accountable governments often fail to reflect the interests of disadvantaged minorities this paper exploits the institutional features of political reservation as practiced in indian states to examine the role of mandated political representation in providing disadvantaged groups influence over policy making ifind that political reservation has increased transfers to groups which benefit from the mandate this finding also suggests that complete policy commitment may be absent in democracies as is found in this case jel d72 d78 hl 1 h50

repeated partnerships with multiple equilibria and imperfect monitoring an experimental study abstract i investigate finitely repeated partnership games with imperfect monitoring where both mutual effort and mutual shirking are nash equilibria of the stage game the treatment variable is the number of repetitions i find that period 1 effort rates are increasing in the number of repetitions but subjects use trigger strategies that switch to permanent shirking after enough failed projects so effort rates decrease across time in all treatments additionally the rate of decrease is less when there are more repetitions total effort does not vary much across the treatments because the increased period 1 effort when the number of repetitions is large is mostly canceled out by the erosion of effort as the game progresses

an experimental study of uncertainty in coordination games global games and poisson games have been proposed to address equilibrium indeterminacy in common knowledge coordination games where fundamentals are commonly known by all players global games assume that agents face idiosyncratic uncertainty about economic fundamentals whereas poisson games model the number of actual players as a poisson random variable to capture population uncertainty in large games the present study investigates in a controlled setup using as controls common knowledge coordination games whether idiosyncratic uncertainty about economic fundamentals or uncertainty about the number of actual players may influence subjects behavior our findings suggest that uncertainty about the number of actual players has a more significant impact on subjects behavior than idiosyncratic uncertainty about economic fundamentals furthermore subjects behavior under poisson population size uncertainty is consistent with the theoretical prediction of poisson coordination games

history institutions and economic performance the legacy of colonial land tenure systems in india we analyze the colonial land revenue institutions set up by the british in india and show that differences in historical property rights institutions lead to sustained differences in economic outcomes areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments and productivity in the post independence period than areas in which these rights were given to the cultivators these areas also have significantly lower investments in health and education these differences are not driven by omitted variables or endogeneity problems they probably arise because differences in historical institutions lead to very different policy choices

cooperation among strangers under the shadow of the future we study the emergence of norms of cooperation in experimental economies populated by strangers interacting indefinitely can these economies achieve full efficiency even without formal enforcement institutions which institutions for monitoring and enforcement facilitate cooperation finally what classes of strategies do subjects employ we find that first cooperation can be sustained even in anonymous settings second some type of monitoring and punishment institutions significantly promote cooperation and third subjects mostly employ strategies that are selective in punishment

economic impacts of new unionization on private sector employers 1984 2001 economic impacts of unionization on employers are difficult to estimate in the absence of large representative data on establishments with union status information estimates are also confounded by selection bias because unions could organize at highly profitable enterprises that are more likely to grow and pay higher wages using multiple establishment level data sets that represent establishments that faced organizing drives in the united states during 1984 1999 this paper uses a regression discontinuity design to estimate the impact of unionization on business survival employment output productivity and wages essentially outcomes for employers where unions barely won the election e g by one vote are compared with those where the unions barely lost the analysis finds small impacts on all outcomes that we examine estimates for wages are close to zero the evidence suggests that at least in recent decades the legal mandate that requires the employer to bargain with a certified union has had little economic impact on employers because unions have been somewhat unsuccessful at securing significant wage gains

measuring strategic uncertainty in coordination games this paper proposes a method to measure strategic uncertainty by eliciting certainty equivalents analogous to measuring risk attitudes in lotteries we apply this method by conducting experiments on a class of one shot coordination games with strategic complementarities and choices between simple lotteries and sure payoff alternatives both framed in a similar way despite the multiplicity of equilibria in the coordination games aggregate behaviour is fairly predictable the pure or mixed nash equilibria cannot describe subjects behaviour we present two global games with private information about monetary payoffs and about risk aversion while previous literature treats the parameters of a global game as given we estimate them and show that both models describe observed behaviour well the global game selection for vanishing noise of private signals offers a good recommendation for actual players given the observed distribution of actions we also deduce subjective beliefs and compare them with objective probabilities

cooperation but no reciprocity individual strategies in the repeated prisoner s dilemma a recent advance in our understanding of repeated pds is the detection of a threshold d at which laboratory subjects start to cooperate predictively this threshold is substantially above the classic threshold existence of grim equilibrium and has been characterized axiomatically by blonski ockenfels and spagnolo 2011 bos in this paper i derive its behavioral foundations first i show that the threshold is equivalent to existence of a semi grim equilibrium s cc s cd s dc s dd it is cooperative s cc 0 5 non reciprocal s cd s dc and robust to imperfect monitoring belief free next i show that the no reciprocity condition s cd s dc also follows from robustness to random utility perturbations logit equilibrium finally i re analyze strategies in four recent experiments and find that the majority of subjects indeed plays semi grim when it is an equilibrium strategy which explains d s predictive success

advance production inventories and market power an experimental investigation i introduction bertrand edgeworth games are an important part of any industrial organization economist s toolkit the unilateral market power created by capacity constraints represents one of economists primary methods for modeling supra competitive prices as a static equilibrium outcome in a price setting game 1 the standard bertrand edgeworth model however rather restrictively assumes that production is to demand and that goods are immediately perishable in the broad swath of modern economies that includes the production and sale of physical products these assumptions are often not even approximately satisfied goods are routinely produced prior to being offered for sale at retail establishments similarly while the effective shelf life of many products is quite short relatively few products perish immediately and many have effective shelf lives that extend throughout a sales season if not longer this paper reports a laboratory experiment conducted to assess the effects of having sellers make production decisions in advance rather than to demand and allowing sellers to carry unsold units across periods on market power in a bertrand edgeworth pricing game by way of preview we find that both advance production and an inventory option prominently affect market outcomes advance production reduces profits relative to a baseline condition while an inventory option reduces both prices and profits these results are important as they suggest that deviations from the standard oligopoly structures that routinely arise in natural contexts may fundamentally affect market performance we organize the paper as follows following a brief review of the pertinent literature in section ii we outline equilibrium predictions for baseline advance production and inventory treatments in section iii section iv describes the experimental design and procedures and section v presents the experimental results the paper concludes with a short section vi ii background a theoretical literature economists have long recognized the restrictiveness of the standard price setting oligopoly models shubik 1955 for example argues that when evaluating price setting duopolies economists should consider price quantity games where sellers simultaneously post prices and quantities in addition to games where price is the only decision variable 2 levitan and shubik 1978 compute the mixed strategy equilibrium for a duopoly given advance production and unlimited capacities more recently tasnadi 2004 analyzes the case of advance production for capacity constrained duopolists pertinent to the present investigation tasnadi shows that under very general conditions advance production raises prices but leaves seller profits unaffected the only theoretical work that analyzes the links between product durability and market prices of which we are aware is a stream of literature following coase 1972 regarding the effects of product durability on monopoly power specifically given sufficiently patient consumers the coase conjecture suggests that infinite durability will eliminate monopoly power analytical results are driven by consumers who drive prices down by waiting for future discounts 3 to the best of our knowledge no one has analyzed the effects of product durability on production and pricing incentives for capacity constrained price setting duopolists b experimental literature the relevant experimental literature consists of three strands a first strand consists of a series of papers establishing that laboratory sellers recognize and exercise the unilateral market power induced by capacity constraints pertinent seminal references are davis and holt 1994 and kruse et al 1994 while some relevant related papers include davis holt and villamil 2002 davis and wilson 2000 and wilson 1998 a second strand of the experimental literature studies the effects of advance production on posted price markets

the graph of prisoners dilemma supergame payoffs as a function of the discount factor abstract the set of subgame perfect correlated equilibrium of the infinitely repeated discounted prisoners dilemma depends on the discount factor the graph of the correspondence of these equilibrium payoffs versus the discount factor is derived and presented these results are especially applicable to situations in which there is a random chance of the supergame ending or an exogenous probability of cooperative breakdown

the system of administrative and political corruption canal irrigation in south india the paper describes how some irrigation engineers raise vast amounts of illicit revenue from the distribution of water and contracts and redistribute part to superior officers and politicians it argues that the corruption system which is centred on control of personnel transfers is an important supply side reason for poor performance of canal irrigated agriculture insofar as the same system operates in other government departments it may be more important for understanding indian politics and the political influences on economic development than has previously been realised

tacit collusion under interest rate fluctuations previous literature has shown that demand fluctuations affect the scope for tacit collusion i study whether discount factor fluctuations can have similar effects i find that collusion depends not only on the level of the discount factor but also and more surprisingly on its volatility collusive prices and profits increase with a higher discount factor level but decrease with its volatility these results have important implications for empirical studies of collusive pricing the role that collusive pricing may play in economic cycles and the study of cooperation in repeated games

collusion as public monitoring becomes noisy experimental evidence this paper uses laboratory experiments to test the implications of the theory of repeated games on equilibrium payoffs and estimate strategies in an infinitely repeated prisoners dilemma game with imperfect public monitoring we find that subjects payoffs i decrease as noise increases and ii are lower than the theoretical maximum for low noise but exceed it for high noise under the assumption that the subjects strategy uses thresholds on the public signal for transition between cooperation and punishment states we find that the best fitting strategy simply compares the most recent public signal against a single threshold

trafficking networks and the mexican drug war abstract drug trade related violence has escalated dramatically in mexico since 2007 and recent years have also witnessed large scale efforts to combat trafficking spearheaded by mexico s conservative pan party this study examines the direct and spillover effects of mexican policy toward the drug trade regression discontinuity estimates show that drug related violence increases substantially after close elections of pan mayors empirical evidence suggests that the violence reflects rival traffickers attempts to usurp territories after crackdowns have weakened incumbent criminals moreover the study uses a network model of trafficking routes to show that pan victories divert drug traffic increasing violence along alternative drug routes jel d72 d85 k42 o17 z13

the electronic mail game strategic behavior under almost common knowledge the paper addresses a paradoxical game theoretic example which is closely related to the coordinated attack problem two players have to play one of two possible coordination games only one of them receives information about the coordination game to be played it is shown that the situation with almost common knowledge is very different from when the coordination game played is common knowledge

voting as communicating this paper develops a model where voters trade off two different motives when deciding how to vote they care about current decision making they are strategic but they also care about communicating their views about their most preferred candidate so as to influence future elections by influencing other voters opinion and or party positioning in effect voters in this model are intermediate between strategic and sincere voters of conventional models in elections with more than 2 candidates this allows us to better investigate the relative efficiency of various electoral systems our main conclusion is that since voting is used as a communication device electoral systems should be designed to facilitate efficient communication e g by opting for 2 round systems rather than 1 round systems

cooperation in the finitely repeated prisoner s dilemma more than half a century after the first experiment on the finitely repeated prisoner s dilemma evidence on whether cooperation decreases with experience as suggested by backward induction remains inconclusive this paper provides a meta analysis of prior experimental research and reports the results of a new experiment to elucidate how cooperation varies with the environment in this canonical game we describe forces that affect initial play formation of cooperation and unraveling breakdown of cooperation first contrary to the backward induction prediction the parameters of the repeated game have a significant effect on initial cooperation we identify how these parameters impact the value of cooperation as captured by the size of the basin of attraction of always defect to account for an important part of this effect second despite these initial differences the evolution of behavior is consistent with the unraveling logic of backward induction for all parameter combinations importantly despite the seemingly contradictory results across studies this paper establishes a systematic pattern of behavior subjects converge to use threshold strategies that conditionally cooperate until a threshold round and conditional on establishing cooperation the first defection round moves earlier with experience simulation results generated from a learning model estimated at the subject level provide insights into the long term dynamics and the forces that slow down the unraveling of cooperation

traveling agents political change and bureaucratic turnover in india abstract we develop a framework to empirically examine how politicians with electoral pressures control bureaucrats with career concerns and the consequent implications for bureaucrats career investments unique microlevel data on indian bureaucrats support our key predictions politicians use frequent reassignments transfers across posts of varying importance to control bureaucrats high skilled bureaucrats face less frequent political transfers and lower variability in the importance of their posts we find evidence of two alternative paths to career success officers of higher initial ability are more likely to invest in skill but caste affinity to the politician s party base also helps secure important positions

the evolution of cooperation in infinitely repeated games experimental evidence 1 for example in infinitely repeated prisoner s dilemma games with patient agents both cooperate and defect may be played in equilibrium even though the theory of infinitely repeated games has been used to explain cooperation in a variety of environments no definitive solution has been provided to the problem of equilibrium selection when both cooperation and defection are possible equilibrium outcomes which one should we expect to prevail previous experimental evidence has shown that subjects often fail to coordinate on a specific equilibrium when they play a small number of infinitely repeated games some subjects attempt to establish cooperative agreements while others defect but how would behavior evolve as subjects learn from previous repeated games would cooperation prevail when it can be supported in equilibrium or will subjects learn

empowerment and efficiency tenancy reform in west bengal the paper analyzes the effect of agricultural tenancy laws offering security of tenure to tenants and regulating the share of output that is paid as rent on farm productivity theoretically the net impact of tenancy reform is shown to be a combination of two effects a bargaining power effect and a security of tenure effect analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the indian state of west bengal in the late 1970s suggests that tenancy reform had a positive effect on agricultural productivity there

endogenous depth of reasoning we introduce a model of strategic thinking in games of initial response unlike standard models of strategic thinking in this framework the player s depth of reasoning is endogenously determined and it can be disentangled from his beliefs over his opponent s cognitive bound in our approach individuals act as if they follow a cost benet analysis the depth of reasoning is a function of the player s cognitive abilities and his payos the costs are exogenous and represent the game theoretical sophistication of the player the benet instead is related to the game payos behavior is in turn determined by the individual s depth of reasoning and his beliefs about the reasoning process of the opponent thus in our framework payos not only aect individual choices in the traditional sense but they also shape the cognitive process itself our model delivers testable implications on players chosen actions as incentives and opponents change we then test the model s predictions with an experiment we administer dierent treatments that vary beliefs over payos and opponents as well as beliefs over opponents beliefs the results of this experiment which are not accounted for by current models of reasoning in games strongly support our theory we also show that the predictions of our model are highly consistent both qualitatively and quantitatively with well known unresolved empirical puzzles our approach therefore serves as a novel unifying framework of strategic thinking that allows for predictions across games

do voters affect or elect policies evidence from the u s house there are two fundamentally different views of the role of elections in policy formation in one view voters can affect candidates policy choices competition for votes induces politicians to move toward the center in this view elections have the effect of bringing about some degree of policy compromise in the alternative view voters merely elect policies politicians cannot make credible promises to moderate their policies and elections are merely a means to decide which one of two opposing policy views will be implemented we assess which of these contrasting perspectives is more empirically relevant for the u s house focusing on elections decided by a narrow margin allows us to generate quasi experimental estimates of the impact of a randomized change in electoral strength on subsequent representatives roll call voting records we find that voters merely elect policies the degree of electoral strength has no effect on a legislator s voting behavior for example a large exogenous increase in electoral strength for the democratic party in a district does not result in shifting both parties nominees to the left politicians inability to credibly commit to a compromise appears to dominate any competition induced convergence in policy

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning

coordination risk and the price of debt abstract creditors of a distressed borrower face a coordination problem even if the fundamentals are sound fear of premature foreclosure by others may lead to pre emptive action undermining the project recognition of this problem lies behind corporate bankruptcy provisions across the world and it has been identified as a culprit in international financial crises but has received scant attention from the literature on debt pricing without common knowledge of fundamentals the incidence of failure is uniquely determined provided that private information is precise enough this affords a way to price the coordination failure comparative statics on the unique equilibrium provides several insights on the role of information and the incidence of inefficient liquidation

lying for strategic advantage rational and boundedly rational misrepresentation of intentions starting from hendricks and mcafee s 2000 example of the allies decision to feint at calais and attack at normandy on d day this paper models misrepresentation of intentions to competitors or enemies allowing for the possibility of bounded strategic rationality and rational players responses to it yields a sensible account of lying via costless noiseless messages in many cases the model has generically unique pure strategy sequential equilibria in which rational players exploit boundedly rational players but are not themselves fooled in others the model has generically essentially unique mixed strategy sequential equilibria in which rational players strategies protect all players from exploitation