What on earth are economic theorists like me trying to accomplish? This paper discusses four dilemmas encountered by an economic theorist: The dilemma of absurd conclusions: Should we abandon a model if it produces absurd conclusions or should we regard a model as a very limited set of assumptions that will inevitably fail in some contexts? The dilemma of responding to evidence: Should our models be judged according to experimental results? The dilemma of modelless regularities: Should models provide the hypothesis for testing or are they simply exercises in logic that have no use in identifying regularities? The dilemma of relevance: Do we have the right to offer advice or to make statements that are intended to influence the real world?

The aim of this paper is to explain the fact that certain properties of binary relations are frequently observed in natural language while others do not appear at all. Three features of binary relation are studied: (1) The ability to use the relation to indicate nameless elements. (2) The accuracy with which the vocabulary spanned by the relation can be used to approximate the actual terms to which a user of the language wishes to refer. (3) The ease with which the relation can be described by means of examples. It is argued that linear orderings are optimal according to the first criteria while asymmetric relations are optimal according to second. From among complete and asymmetric relations (tournaments) those which are transitive are optimal according to the third criterion. Copyright 1996 by The Econometric Society.

The paper is a discussion of the interpretation of game theory. The first half of the paper deals with the notion of "strategy". The paper endorses the view that equilibrium strategy describes a player's plan of action, as well as those considerations which support the optimality of his plan rather than being merely described as a "plan of action". In the second half of the paper it is argued that a good model in game theory has to be realistic in the sense that it provides a model for the perception of real life social phenomena. It should incorporate a description of the relevant factors involved, as perceived by the decision makers. Copyright 1991 by The Econometric Society.

Etude d'un jeu de negociation strategique sequentiel avec information incomplete. Caracterisation d'une classe d'equilibres sequentiels appeles equilibres sequentiels de negociation et demonstration de l'unicite de cet equilibre

Focuses on a study which examined perfect equilibrium in a bargaining model. Overview of the strategic approach adopted for the study; Details of the bargaining situation used; Discussion on perfect equilibrium. (From Ebsco)

We study a principal–agent model in which the agent is boundedly rational in his ability to understand the principal's decision rule. The principal wishes to elicit an agent's true profile so as to determine whether or not to grant him a certain request. The principal designs a questionnaire and commits himself to accepting certain responses. In designing such a questionnaire, the principal takes into account the bounded rationality of the agent and wishes to reduce the success probability of a dishonest agent who is trying to game the system. It is shown that the principal can construct a sufficiently complex questionnaire that will allow him to respond optimally to agents who tell the truth and at the same time to almost eliminate the probability that a dishonest agent will succeed in cheating.

A speaker wishes to persuade a listener to accept a certain request. The conditions under which the request is justified, from the listener's point of view, depend on the values of two aspects. The values of the aspects are known only to the speaker and the listener can check the value of at most one. A mechanism specifies a set of messages that the speaker can send and a rule that determines the listener's response, namely, which aspect he checks and whether he accepts or rejects the speaker's request. We study mechanisms that maximize the probability that the listener accepts the request when it is justified and rejects the request when it is unjustified, given that the speaker maximizes the probability that his request is accepted. We show that a simple optimal mechanism exists and can be found by solving a linear programming problem in which the set of constraints is derived from what we call the L-principle.

The authors study the Nash equilibria of a two-person, infinitely-repeated game in which players' preferences depend on repeated game payoffs and the complexity of the strategies they use. The model considered is that of A. Rubinstein (1986). Necessary conditions on the structure of the equilibria are derived. These results place significant restrictions on equilibrium payoffs. The results suggest that the introduction of implementation costs results in a striking discontinuity in the Nash equilibrium sets in terms of strategies and payoffs. Copyright 1988 by The Econometric Society.

This paper considers a market where pairs of agents who are interested in carrying out a transaction are brought together by a stochastic process and, upon meeting, initiate a bargaining process over the terms of the transaction.The basic bargaining problem is treated with the strategic approach.The paper derives the steady state equilibrium agreements; analyzes their dependence on market conditions such as the relative numbers of agents of different types; and discusses their relations with the competitive equilibrium outcome and other results in the search equilibrium literature.1133