[In this paper the process of exchange is formulated as a noncooperative game. The game is analogous to the familiar institution of competitive bidding in a sealed-tender auction in which one agent (the auctioneer) chooses among trades offered by the other agents (the bidders). Using various regularity assumptions it is shown that this noncooperative game has a Nash equilibrium which yields an allocation in the core of the corresponding cooperative game of exchange. Also, as the bidders are replicated by division this allocation (aggregated by types) converges to a Walrasian allocation in which each type's budget constraint (using the efficiency prices) is satisfied. Thus it appears that bidding is a competitive process for achieving a cooperative outcome, and in the limit, a market outcome.]

[A parametric procedure for linear programming is shown to solve the bilinear complementarity problem, of which a special case is the problem of computing a competitive equilibrium of a piecewise linear economic model.]

WE SHALL DEFINE a syndicate to be a of individual decision makers who must make a common decision under uncertainty, and who, as a result, will receive jointly a payoff to be shared among them. Our concern is to analyze the decision process of a syndicate when the members have diverse risk tolerances and/or diverse probability assessments of the uncertain events affecting the payoff. Of particular interest is the possiblity of constructing a surrogate group utility and a surrogate group probability assessment. Such constructions potentially have a role in the theory of finance; e.g., for determining the forms of organizational charters and financial instruments, as well as the modes of delegating the decision process to professional managers. The present treatment, however, is confined to tractable features embodying only a small measure of the complexity of practical situations. Of comparable importance are the ramifications for welfare theory; in particular, we shall be able to specify conditions under which Pareto optimal behavior by the satisfies the Savage axioms [15] foy consistent decision making under uncertainty, and to isolate the inconsistent characteristics in the contrary case. Arrow's original treatise [1] has been the source of most of the work on decision theory. Marschak [13], Radner [17], and Bower [6] have considered the case of a team, in which there is a joint utility function for the members. Harsanyi [9] and Theil [16] have considered the criterion that the decisions satisfy the Von Neumann-Morgenstern axioms, and others. Madansky [12] has imposed the external Bayes axiom in the case of a common utility function but differing probability assessments among the members. Christenson [7] has constructed an axiomatic system for the case of an investment banking syndicate that is a special case of the present study, except for certain institutional factors. Borch [3, 4, 5]

The market for auditing services is viewed here in terms of the strategic choices made by auditors, owners (clients), and investors. Owners win the confidence of investors by renting the reputations of auditors for accuracy and fairness. Auditors earn a market rate of return on their investment, via the costs of quality audits, in building a reputation among investors. Suggested research topics on the market structure include a study of the auditor's choices between enhancing its reputation among investors and catering to clients. The auditor is also a party to the strategic interaction between an owner and an investor, since the auditor has access to privileged information useful to the investor. Suggested research topics include a study of the optimal fineness of the information reflected in financial reports. Also mentioned briefly is the role of network externalities in the adoption of accounting conventions.

JN the literature on the macroeconomic aspects of R&D and technical change, several authors have emphasized the importance of technological opportunity as an influence on firms' innovative efforts. Phillips (1966, 1971) has been the leading proponent of a view that exogenous scientific progress is the key determinant of an industry's innovative effort and progressiveness. Scherer (1965) and Comanor (1967) have also used the concept of technological opportunity in their empirical work. The common empirical finding of these three authors is that their measures of technological opportunity exerted a strong positive influence on firms' and industries' R&D efforts. The present paper represents an effort both to extend the knowledge of the influence of opportunity on R&D and also to examine the relation among technological opportunity, R&D effort, and licensing of inventions. A license grants either the legal rights to, or the knowledge of, an invention' to the licensee and may require royalty payments in return. Licensing is a potentially important means of transferring technology2 and is also a strategic variable where firms are engaged in product rivalry based on the physical characteristics of their products. The emphasis of this paper is both conceptual and empirical. The first section below describes a framework for viewing the influence of technological environment on R&D effort and licensing. It is argued that there are two important dimensions of what other authors have referred to as technological opportunity. The second section then tests the implications of the conceptual arguments. Testing of these implications uses new data, collected for this study, on firms' R&D spending and license payments.

Much effort has recently been devoted to the development of strategic models of bargaining with private information. At the same time, empirical analyses of data on collective bargaining in the labor market have generated an interesting list of facts to be explained. In this paper we assess the prospective interactions between these theoretical and empirical developments. The style here is expository: detailed arguments have been ruthlessly suppressed. A more complete treatment can be found in our 1989 article. The theoretical models deal with conflicts between rational bargainers in situations where at least one of the bargainers has private information, as in the case where an employer knows more about the value of labor's product than the workers do. We start by explaining why private information is important in building models of strikes. In a naive model of collective bargaining, the union starts with a tough demand, and

[We propose a new criterion for equilibria of extensive games, in the spirit of Selten's perfectness criteria. This criterion requires that players' strategies be sequentially rational: Every decision must be part of an optimal strategy for the remainder of the game. This entails specification of players' beliefs concerning how the game has evolved for each information set, including informaiton sets off the equilibrium path. The properties of sequential equilibria are developed; in particular, we study the topological structure of the set of sequential equilibria. The connections with Selten's trembling-hand perfect equilibria are given.]