This paper proposes a model of the process by which players learn to play repeated coordination games, with the goal of understanding the results of some recent experiments.In those experiments the dynamics of subjects' strategy choices and the resulting patterns of discrimination among equilibria varied systematically with the rule for determining payoffs and the size of the interacting groups, in ways that are not adequately explained by available methods of analysis.The model suggests a possible explanation by showing how the dispersion of subjects' beliefs interacts with the learning process to determine the probability distribution of its dynamics and limiting outcome.

[This paper studies the limits of contracting as a method for achieving efficient allocation, with particular attention to how informational asymmetries interact with the timing of commitment to a mechanism. There are arguments to suggest, in the spirit of the Coase "Theorem," that if agents can agree on a mechanism before observing their private information (or, a fortiori, if information is perfect or symmetric), they can realize an incentive-efficient allocation. If, however, agents observe their private information before contracting, there may be further restrictions, due to information leakage during the process of bargaining over mechanisms, on what they can achieve by contract. These restrictions are characterized and compared to those proposed for this setting by Holmstrom and Myerson [6]. It is also shown that there is at least one specification of the rules that govern mechanism design that makes it possible for agents to achieve, contracting after they observe their private information, the same incentive-efficient allocations that are attainable when they can commit themselves to a mechanism before observing their private information.]

[This paper proposes a simple theory to explain bargaining impasses, which is based on Schelling's view of the bargaining process as a struggle between bargainers to commit themselves to favorable bargaining positions. Because bargaining impasses are generally Pareto-inefficient, anything involving a positive probability of impasse is Pareto-inefficient as well. It is demonstrated that in spite of this avoidable inefficiency, when successful commitment is uncertain and irreversible it can still be rational for individuals to attempt commitment and thereby risk an impasse; in a leading special case, the model reduces to a Prisoner's Dilemma game, in which only strategic-dominance arguments are needed to establish this conclusion. Further, making commitment more difficult, or changing the costs of disagreement in a way that makes available a wider range of settlements that are better for both bargainers than disagreement, need not always lower the probability of impasse, in spite of the conventional wisdom to the contrary.]

[This paper describes a simple, operational procedure that, under reasonable economic assumptions, always generates Pareto-efficient egalitarian-equivalent allocations (PEEEA) when agents know each other's preferences. The procedure constitutes a new, constructive proof of Pazner and Schmeidler's theorems on the existence of PEEEA, and shows that PEEEA, like fair and Pareto-efficient allocations, can be decentralized using less information than is required by the standard market procedure for decentralizing allocations that maximize a neoclassical, individualistic social welfare function.]

[This paper investigates the possibility of arriving at the mixed-strategy solution of a zero-sum two-person game through an iterative learning process. Learning takes place during repeated play of the game, in which the players have no direct knowledge of the payoff matrix but are allowed to record what happens during play. In this context, all members of a wide class of behaviorally plausible learning mechanisms are shown to be locally unstable for "almost all" zero-sum two-person games with mixed-strategy solutions.]

Compulsory arbitration is frequently employed to resolve labor-management bargaining disputes when the union is legally prohibited (as are, for example, many public employees' unions) from striking. In this form of arbitration, an arbitrator is empowered to impose a settlement on the bargaining parties if their negotiations break down. Various compulsory-arbitration schemes are now in use in many states, including Alaska, Connecticut, Iowa, Maine, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, South Dakota, Washington, Wisconsin, and Wyoming. But there has been little formal analysis of the various schemes that are employed in these states and, as a result, the basis available for choice among them remains incomplete. This paper classifies the theoretical problems that must be resolved before a more careful comparison of these compulsory-arbitration schemes is possible, provides a brief overview of the work that has been done on each of these problems, and indicates what appear to be the most promising directions for future research along these lines. Four kinds of compulsory arbitration are considered here: conventional ccmpulsory arbitration (CCA), in which the arbitrator imposes a settlement of his (unrestricted) choice if negotiations break down; finaloffer arbitration (FOA), in which the arbitrator must choose without compromise between bargainers' final offers if negotiations break down; multiple FOA, a variant of FOA originally suggested by Donn; and, on occasion, issue-by-issue FOA, which is like simple FOA except that the arbitrator is permitted to fashion his settlement from the components of bargainers' final offers. CCA, simple FOA, and issue-by-issue FOA are already in widespread use, while multiple FOA, which is similar but not identical to a scheme used in Eugene, Oregon, has been suggested by Donn and my 1979a article as an improvement on simple FOA. In the literature of industrial labor relations, compulsory-arbitration schemes have been judged primarily by three criteria: the quality of the arbitral settlements they generate when negotiations break down; their freedom from bias, which is usually defined as the distortion of negotiated settlements away from what they would have been in ordinary bargaining, with both strikes and lockouts permitted; and the extent to which they create environments conducive to negotiated settlements. An integrated analysis, in which bargainers choosing their stategies consider the effects of their actions on negotiated and arbitral settlements as well as on the probabilities of these possibilities, would be ideal. But in beginning the study of the effects of arbitration schemes, it is convenient, and probably not misleading, to simplify the problem by dividing it. Thus, I shall propose separate analyses of the quality of arbitral settlements, under noncooperative behavioral assumptions; the bias of negotiated settlements, under cooperative assumptions; and the probability of a negotiated settlement, under a blend of both noncooperative and cooperative assumptions. Each section of this paper in turn discusses existing work that is relevant to judging arbitration schemes by one of the above three criteria. *University of California-San Diego. This research was supported by the National Science Foundation. Many of the observations made here evolved in discussions and correspondence with Clifford Donn, who by no means agrees with all, or even most, of them. I am grateful to him, and to Joel Sobel and participants in a workshop presentation at the University of Chicago, who also made helpful comments.

Starting from an example of the Allies' decision to feint at Calais and attack Normandy on D-Day, this paper models misrepresentation of intentions to competitors or enemies. Allowing for the possibility of bounded strategic rationality and rational players' responses to it yields a sensible account of lying via costless, noiseless messages. In some leading cases, the model has generically unique pure-strategy sequential equilibria, in which rational players exploit boundedly rational players, but are not themselves fooled. In others, the model has generically essentially unique mixed-strategy sequential equilibria, in which rational players' strategies protect all players from exploitation.

This paper studies the settlements generated by several variants of a compulsory-arbitration scheme called ``final-offer arbitration'' (FOA). Some of these are now in use in several states, and one has been recommended by Clifford Donn as an improvement on existing schemes. Under reasonable economic assumptions, two versions of FOA now being used are equivalent to imposing z̄, the settlement the arbitrator would impose in conventional compulsory arbitration would impose in conventional compulsory arbitration, a result contrary to the intent of the FOA statues. However, a simple modification of Donn's proposal leads to a scheme that generates Pareto-efficient settlements that are at least as good for each agent as z̄. This suggests that substantial gains in welfare could be realized by a simple change in existing FOA statues and possibly also by using the new procedure in situations where compulsory arbitration is not now prescribed by law.

The effect of short-term contracting on resource extraction is studied, in a two-country model of international trade in oil. Countries' planners are assumed to be fully rational, with perfect information and perfect foresight. Contracts are assumed perfectly enforceable and complete, except that short-term contracts do not allow commitments to actions taken beyond the contract period. We show that short-term contracting limits countries' opportunities for intertemporal consumption-smoothing, reducing their collective tolerance for temporal variation in consumption. This tends to make them extract more slowly than in the efficient plan that results from long-term contracting.