© The Author 2015. Committee voting has mostly been investigated from the perspective of the standard Baron-Ferejohn model of bargaining over the division of a pie, in which bargaining ends as soon as the committee reaches an agreement. In standing committees, however, existing agreements can be amended. This article studies an extension of the Baron-Ferejohn framework to a model with an evolving default that reflects this important feature of policymaking in standing committees: In each of an infinite number of periods, the ongoing default can be amended to a new policy (which is, in turn, the default for the next period). The model provides a number of quite different predictions. (i) From a positive perspective, the key distinction turns on whether the quota is less than unanimity. In that case, patient enough players waste substantial shares of the pie each period and the size principle fails in some pure strategy Markov perfect equilibria. In contrast, the unique Markov perfect equilibrium payoffs in a unanimity committee coincide with those in the corresponding Baron-Ferejohn framework. (ii) If players have heterogeneous discount factors then a large class of subgame perfect equilibria (including all Markov perfect equilibria) are inefficient.

© 2015. Individuals respond to the risk of contagious infections by restricting interaction and by investing in protection. We develop a model that examines the trade-off between these two actions and the consequences for infection rates.There exists a unique equilibrium: individuals who invest in protection choose to interact more relative to those who do not invest in protection. Changes in the contagiousness of the disease have non-monotonic effects: as a result interaction initially falls and then rises, while infection rates too may initial increase and then decline.We then consider a society with two communities that differ in their returns from interaction - High and Low. Individuals in isolated communities exhibit different behavior: the High community has a higher rate of protection and interaction, and a lower rate of infection. Integration amplifies these differences.

We consider a setup where agents care about i) taking actions that are close to their preferences, and ii) coordinating with others. The preferences of agents in the same group are drawn from the same distribution. Each individual is exogenously matched with other agents randomly selected from the population. Starting from an environment where everyone belongs to the same group, we show that introducing agents from a different group (whose preferences are uncorrelated with those of each of the incumbents) generates costs but may also (surprisingly) generate benefits in the form of enhanced coordination.

People often form expectations about others using the lens of their own attitudes (the so-called consensus effect). We study the implications of this for trust and trustworthiness in an evolutionary model where social preferences are endogenous. Trustworthy individuals are more "optimistic" than opportunists and are accordingly less afraid to engage in market-based exchanges, where they may be vulnerable to cheating. Depending on the distribution of social preferences in the population, the material benefits from greater participation may compensate for the costs of being trustworthy. By providing an explicit account of how individuals form and revise their beliefs, we are able to show the existence of a polymorphic equilibrium where both trustworthiness and opportunism coexist in the population. We also analyze the effect of enforcement, distinguishing between its role as deterrence of future misbehavior and as retribution for past misbehavior. We show that enforcement aimed at deterring opportunistic behavior has ambiguous effects on social preferences. It may favor the spreading of trustworthiness (crowding in), but the opposite (crowding out) may also occur. By contrast, crowding out never occur when punishment is merely intended as retribution.

We consider infinite-horizon economies populated by a continuum of agents subject to idiosyncratic shocks. This framework contains models of saving and capital accumulation with incomplete markets in the spirit of works by Bewley, Aiyagari, and Huggett; models of entry, exit, and industry dynamics in the spirit of Hopenhayn’s work; and dynamic models of occupational choice and search models as special cases. Robust and easy-to-apply comparative statics results are established with respect to exogenous parameters as well as various kinds of changes in the Markov processes governing the law of motion of the idiosyncratic shocks.

This paper analyses a model of legislative bargaining in which parties form tentative coalitions (protocoalitions) before deciding on the allocation of a resource. Protocoalitions may fail to reach an agreement, in which case they may be dissolved (breakdown) and a new protocoalition may form. We show that agreement is immediate in equilibrium, and the proposer advantage disappears as the breakdown probability goes to zero. We then turn to the special case of apex games and explore the consequences of varying the probabilities that govern the selection of formateurs and proposers. Letting the breakdown probability go to zero, most of the probabilities considered lead to the same ex post pay-off division. Ex ante expected pay-offs may follow a counterintuitive pattern: as the bargaining power of weak players within a protocoalition increases, the weak players may expect a lower pay-off ex ante.

This paper studies an allocation procedure for coalitional games with veto players. The procedure is similar to the one presented by Arin and Feltkamp (J Math Econ 43:855-870, 2007), which is based on Dagan et al. (Games Econ Behav 18:55-72, 1997). A distinguished player makes a proposal that the remaining players must accept or reject, and conflict is solved bilaterally between the rejector and the proposer. We allow the proposer to make sequential proposals over several periods. If responders are myopic maximizers (i.e. consider each period in isolation), the only equilibrium outcome is the serial rule of Arin and Feltkamp (Eur J Oper Res 216:208-213, 2012) regardless of the order of moves. If all players are fully rational, the serial rule still arises as the unique subgame perfect equilibrium outcome if the order of moves is such that stronger players respond to the proposal after weaker ones.

Suppose that in symmetric aggregative games, in which payoffs depend only on a player's strategy and on an aggregate of all players' strategies, players have conjectures about the reaction of the aggregate to marginal changes in their strategy. The players play a conjectural variation equilibrium, which determines their fitness payoffs. The paper shows that only consistent conjectures can be evolutionarily stable in an infinite population, where a conjecture is consistent if it is equal to the marginal change in the aggregate determined by the actual best responses. In the finite population case, only zero conjectures representing aggregate-taking behavior can be evolutionarily stable.

We focus on the incentives of an industry with a continuum of small firms to invest in a cleaner technology under two environmental policy instruments: tradable emission permits and emission taxation. We assume asymmetric information, in that the firms' abatement costs with the new technology are either high or low. Environmental policy is set either before the firms invest (commitment) or after (time consistency). Under commitment, the welfare comparison follows a modified Weitzman rule, featuring reverse probability weighting for the slope of the marginal abatement cost curve. Both instruments can lead to under- or overinvestment ex post. Tradable permits lead to less than optimal expected new technology adoption. Under time consistency, the regulator infers the cost realization and implements the full-information social optimum.

We report a controlled laboratory experiment examining risk-taking and information aggregation in groups facing a common risk. The experiment allows us to examine how subjects respond to new information, in the form of both privately observed signals and signals reported from others. We find that a considerable number of subjects exhibit ‘reverse confirmation bias’: they place less weight on information from others that agrees with their private signal and more weight on conflicting information. We also find a striking degree of consensus when subjects make decisions on behalf of the group under a random dictatorship procedure. Reverse confirmation bias and the incidence of consensus are considerably reduced when group members can share signals but not communicate.