We study matching and coalition formation environments allowing complementarities and peer effects. Agents have preferences over coalitions, and these preferences vary with an underlying, and commonly known, state of nature. Assuming that there is substantial variability of preferences across states of nature, we show that there exists a core stable coalition structure in every state if and only if agents' preferences are pairwise-aligned in every state. This implies that there is a stable coalition structure if agents' preferences are generated by Nash bargaining over coalitional outputs. We further show that all stability-inducing rules for sharing outputs can be represented by a profile of agents' bargaining functions and that agents match assortatively with respect to these bargaining functions. This framework allows us to show how complementarities and peer effects overturn well known comparative statics of many-to-one matching.

A buyer wishes to purchase a good from a seller who chooses a sequence of prices over time. Each period the buyer can also exercise an outside option, abandoning their search or moving on to another seller. We show there is a unique equilibrium in which the seller charges a constant price in every period equal to the monopoly price, contravening the Coase conjecture. We then embed the single-seller model into a search framework and show the result provides a foundation for the usual “no haggling” assumption. (JEL C78, D42, D43, L12, L13)

We study extensive‐form games and mechanisms allowing agents that plan for only a subset of future decisions they may be called to make (the planning horizon ). Agents may update their so‐called strategic plan as the game progresses and new decision points enter their planning horizon. We introduce a family of simplicity standards which require that the prescribed action leads to unambiguously better outcomes, no matter what happens outside the planning horizon. We employ these standards to explore the trade‐off between simplicity and other objectives, to characterize simple mechanisms in a wide range of economic environments, and to delineate the simplicity of common mechanisms such as posted prices and ascending auctions, with the former being simpler than the latter.

Abstract We incorporate externalities into the stable matching theory of two-sided markets. Extending the classical substitutes condition to markets with externalities, we establish that stable matchings exist when agent choices satisfy substitutability. We show that substitutability is a necessary condition for the existence of a stable matching in a maximal-domain sense and provide a characterization of substitutable choice functions. In addition, we extend the standard insights of matching theory, like the existence of side-optimal stable matchings and the deferred acceptance algorithm, to settings with externalities even though the standard fixed-point techniques do not apply.

Pay-as-bid (or discriminatory or multiple-price) auctions are used to sell homogenous goods such as treasury securities and commodities.We prove the uniqueness of their pure-strategy Bayesian Nash equilibrium and establish a tractable representation of equilibrium bids for symmetrically-informed bidders.Analyzing design, we show that supply transparency and full disclosure are revenue-maximizing in pay as bid, though not necessarily in uniform-price (or single-price) auctions, the main alternative auction format.Pay as bid raises weakly more revenue than uniform price and may lead to higher welfare.Our results provide an explanation for the revenue equivalence observed in empirical studies of treasury auctions.