Social media influencers account for a growing share of marketing worldwide. We demonstrate the existence of a novel form of market failure in the advertising market: influencer cartels, where groups of influencers collude to increase their advertising revenue by inflating their engagement. Our theoretical model shows that influencer cartels can improve consumer welfare if they expand social media engagement to the target audience, or reduce welfare if they divert engagement to less relevant audiences. Drawing on the model's insights, we empirically examine influencer cartels using novel datasets and machine learning tools, and derive policy implications.

We propose a solution concept, consistent-planning equilibrium (CP-EUA), for two-playermulti-stage games with almost perfect information. Players are neo-expected payoff maximizers.The associated (ambiguous) beliefs are revised by Generalized Bayesian Updating. Individualstake account of possible changes in their preferences by using consistent planning. We show that ifthere is ambiguity in the centipede game and players are sufficiently optimistic then it is possible tosustain ‘cooperation’ for many periods. Similarly, in a non-cooperative bargaining game we showthat there may be delay in agreement being reached.

Apology laws, which exclude evidence of an apology from trial, were widely introduced to reduce litigation. The evidence shows, rather, that these laws have been counterproductive: increasing litigation, primarily by discouraging plaintiffs from dropping their claims. We explain this evidence by extending settlement negotiation models to allow the plaintiff to quit at any stage and by introducing defendants who care about their future relationship with the plaintiff. Apology laws oversubsidize apologies, preventing any defendant type from credibly signaling via an apology; and no plaintiff type then quits before trial.

While insights into optimal fundraising strategies inform the debate on whether fundraising is valuable to non-profits seeking to maximize their charitable income, they do not speak to questions related to production efficiency or the optimal size and shape of the sector. Answering these questions requires a broader perspective. We argue that such a broader perspective must take into account the implications of inter-charity competition and donor responses for (i) the distribution of donations across charitable causes, across time and in aggregate; (ii) the technological choices charities make when deciding on how to convert donations and other inputs in the production of charitable outputs; and (iii) the structure of charitable markets. Using the insights from (i)–(iii), we then discuss the scope of government policies and tax incentives.