# Northwestern University, Center for Mathematical Studies in Economics and Management Science

# Discussion Papers

Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014

Phone: 847/491-3527

Fax: 847/491-2530

Web page: http://www.kellogg.northwestern.edu/research/math/

Email:

More information through EDIRC

Phone: 847/491-3527

Fax: 847/491-2530

Web page: http://www.kellogg.northwestern.edu/research/math/

Email:

More information through EDIRC

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**To be notified about new items in this series:**fwalker@kellogg.northwestern.edu (see also NEP)

**For corrections or technical questions regarding this series, please contact (Fran Walker)**

**Series handle:**repec:nwu:cmsems

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### 1988

**774 Partially-Revealing Rational Expectations Equilibrium In A Competitive Economy***by*Lawrence M. Ausubel**773 Price Leadership***by*Raymond Deneckere & Dan Kovenock**772 Dynamic Monopoly Power When Search is Costly***by*Kyle Bagwell & Michael Peters**771 Quality vs. Quantity in Military Procurement: An Organizational Theory of Decision Bias***by*William P. Rogerson**770 Dynamic Auctions***by*Daniel R. Vincent**769 Managerial Incentives in An Entrepreneurial Stock Market Model***by*R. E. Kihlstrom & Steven A. Matthews**768 Testing Between Competing Models of Business Cycles: The Efficient Long-Term Contract Hypothesis Versus the Intertemporal Substitution Hypothesis***by*H. Osano & T. Inoue**767 Sustainable Matching Plans with Adverse Selection***by*Roger B. Myerson**766 Efficient Investment and Trade with Asymmetric Information***by*William P. Rogerson**765 A Strategic Form for a Convex Game***by*M. Nakayama**764 Uniqueness of Nash Equilibrium Points in Bimatrix Games***by*L. G. Quintas**763 Equilibrium of Repeated Games With Cost of Implementation***by*Alejandro Neme & Luis Quintas**762 A Note on Polymatrix Games***by*L. G. Quintas**760 Efficiency in Partnership When The Joint Output is Uncertain***by*Steven R. Williams & Roy Radner**759 Profit Regulation of Defense Contractors and Prizes for Innovation : Theory and Evidence***by*William P. Rogerson**757 A Cooperative Game of Information Trading: The Core and the Nucleolus***by*S. Muto & M. Nakayama**755 Nonlinear Dynamics Applied to Numerical Analysis and Economics***by*Donald G. Saari**741 The Rate of Convergence to Efficiency In The Buyer's BidDouble Auction As The Market Becomes Large***by*Mark A. Satterthwaite & Steven R. Williams**740 The Core of Resale-Proof Information Trades***by*Mikio Nakayama & Luis Quintas

### 1987

**980 Acyclicity and Dynamic Stability: Generalizations and Applications***by*Michele Boldrin & Luigi Montrucchio**798 Consumer-Benefited Cartels Under Strategic Capital Investment Competition***by*Akihiko Matsui**790 Equilibrium, Price Formation and the Value of Information in Economies with Privately Informed Agents***by*Matthew O. Jackson**783 Bounded Rationality and Strategic Complexity in Repeated Games***by*Ehud Kalai**758 The Role of Export Subsidies When Product Quality is Unknown***by*Kyle Bagwell & R. Staiger**756 Optimal Orderings for Parallel Search***by*Tara Vishwanath**754 The Limits of Monopolization Through Acquisition***by*Morton I. Kamien & Israel Zang**753 The Coordination Problem and Equilibrium Theories of Recessions***by*Larry E. Jones & R. E. Manuelli**752 The Logit as a Theoretical Model of Product Differentiation: Market Equilibrium and Social Optimum***by*Simon Anderson & Andre de Palma**751 The Polytope of Degree Sequences***by*Uri N. Peled & Murali L Srinivasan**750 Competition, Relativism, and Market Choice***by*Debra J. Aron & Edward P. Lazear**749 Ignoring Ignorance and Agreeing to Disagree***by*D. Samet**748 Is Approval Voting an 'Unmitigated Evil?' A Response to Brams***by*Donald G. Saari & Jill Van Newenhizen**747 Symmetry and Extensions of Arrow's Theorem***by*Donald G. Saari**746 Turnpike Properties in a Finite Horizon Differential Game: Dynamic Duopoly with Sticky Prices***by*Chaim Fershtman & Morton I. Kamien**745 A Dictionary for Voting Paradoxes***by*Donald G. Saari**744R Pre-Play Communication in Two-Person Sealed-Bid Double Auctions***by*Steven A. Matthews & Andrew Postlewaite**743 Market Frictions and Hierarchical Trading Institutions***by*Birger Wernerfelt**742 Infinite Horizon Games With Perfect Equilibrium Points***by*Subir K Chakrabarti**739 On the Perniciousness of Direct Elections in Organizations Democratically Ruled by Imperfectly Informed Members: A single-agent multiple-principal agency problem***by*Virgilio Rodriguez**738 Perfect Equilibria in a Trade Liberalization Game***by*Kiminori Matsuyama**736 On the Approximation of Upper Semi-Continuous Correspondences and the Equilibriums of Generalized Games***by*C. Ionescu Tulcea**735 Susceptibility to Manipulation***by*Donald G. Saari**733 Quantity Discount Schemes for Channel Coordination***by*Mark Parry & Dipak Jain**732 A Stochastic Model of Household Brand Switching Behavior***by*Dipak Jain & Shun- Chen Niu**731 Cooperation Through Delegation***by*Chaim Fershtman**730 Optimality of a General Ad Valorem Tax***by*Lars Thorlund-Petersen**729 Advertising and Limit Pricing***by*Kyle Bagwell & Garey Ramey**728 A Direct Mechanism Characterization of Sequential Bargaining With One-Sided Incomplete Information***by*Lawrence M. Ausubel & Raymond J. Deneckere**727 Commuters' Paths With Penalties for Early or Late Arrival Time***by*Andre de Palma & Pierre Hansen & Martine Labbe**726 Demand for Differentiated Products***by*Simon P. Anderson & Andre de Palma & Jacques-Francois Thisse**725 Schur-Convex Homogenous Difference Equations***by*Lars Thorlund-Petersen**724R Cash Versus Direct Food Relief***by*Stephen Coate**723R Bilateral Trade With The Sealed Bid K-Double Action: Existence And Efficiency***by*Mark A. Satterthwaite & Steven R. Williams**722 Introductory Price as a Signal of Cost in a Model of Repeat Business***by*Kyle Bagwell**721 Dynamic Matching Problems With Incentive Constraints***by*Roger B. Myerson**719 Lexicographic Domination in Extensive Games***by*Akira Okada**718 Approximation of Third-Degree Stochastic Dominance by Cone Orderings***by*Lars Thorlund-Petersen**717 The Value of Infommation in a Strategic Conflict***by*MortonI. Kamien**716 Strong, Perfect Equilibrium Payoffs of Inertia Supergames***by*Subir K Chakrabarti**714 On the Optimality of Menus of Linear Contracts***by*William P. Rogerson**709 Convergence of Games With Asymmetric Information***by*Kevin D. Cotter

### 1986

**788 Information and Time-Of-Use Decisions in Stochastically Congestable Facilities***by*Richard Arnott**737 Immiserizing Growth in Diamond's Overlapping Generations Model: AGeometrical Exposition***by*Kiminori Matsuyama**734 Cyclical and Chaotic Behavior in a Dynamic Equilibrium Model***by*Raymond Deneckere & Kenneth Judd**720 Competitive Location in the Plane***by*Zvi Drezner & Eitan Zemel**715 Umbrella Branding as a Signal of New Product Quality: An Example of Reputational Economies of Scope***by*Birger Wemerfelt**713 On Thc Computational Complexity of Facets of the Knapsack Problem***by*Eitan Zemel**712 Symmetry, Voting, and Social Choice***by*Donald G. Saari**711 Informational Product Differentiation as a Barrier to Entry***by*Kyle Bagwell**710 We Eventually Agree***by*James Bergin**706 A Two-Person Repeated Bargaining Game with Long-Term Contracts***by*Akira Okada**705 Equilibrium Price Dynamics for an Experience Good***by*Kyle Bagwell & Michael Riordan**704 Advertising as a Signal When Price Guarantees Quality***by*William P. Rogerson**703 Internal Pricing and Cost Allocation for Efficient Decentralized Control***by*Avraham Beja & Israel Zang**702 Partially-Revealing Rational Expectations Equilibria in a General Equilibrium Economy: An Example Without Noise***by*Lawrence M. Ausubel**701 Should Food Aid Be Given Away or Sold During a Famine?***by*Stephen Coate**700 Discrete Versus Continuous Trading in Securities Markets with Net Worth Constraints***by*Kerry Back & Stanley R. Pliska**699 Learning-by-Doing and the Introduction of New Goods***by*Nancy L Stokey**698 A Note on the Existence of Single Price Equilibrium Price Distributions in Sequential Search Models***by*William P. Rogerson**696 On the Equilibriums of Generalized Games***by*C. Ionescu Tulcea**695 Reputation in Bargaining and Durable Goods Monopoly***by*Lawrence M. Ausubel & Raymond J. Deneckere**694 Uniqueness of Nash Equilibrium for Linear-Convex Stochastic Differential Games***by*Birger Wernerfelt**693 Tacit Collusion and Product Differentiation***by*Birger Wernerfelt**692 Information Revelation in Infinitely Repeated Incomplete Information Games***by*James Bergin**691 Credible Negotiation Statements and Coherent Plans***by*Roger B. Myerson**690 The Shadow Price of Information in Continuous Time Decision Problems***by*Kerry Back & Stanley R. Pliska**689 The Importance of the Agenda in Bargaining***by*Chaim Fershtman**688 Preemptive Bidding and the Role of the Medium of Exchange in Acquisitions***by*Michael J. Fishman**686 A Characterization of Sequential Equilibrium Strategies in Infinitely Repeated Incomplete Information Games***by*James Bergin**684 Monopolistic Competition and Preference Diversity***by*Raymond Deneckere & Michael Rothschild**683 Securities Market Equilibrium Without Bankruptcy: Contingent ClaimValuation and the Martingale Property***by*Kerry Back**681 Capital Gains Taxation by Realization in Dynamic General Equilibrium***by*Kenneth L. Judd**680 Are Bayesian-Nash Incentives and Implementations Perfect?***by*Ehud Kalai & Dov Samet**679 Finite Rationality and Interpersonal Complexity in Repeated Games***by*Ehud Kalai & William Stanford**678 On the Existence of Sunspot Equilibria in an Overlapping Generations Model***by*James Peck**677 The Kinked Demand Curve***by*Ehud Kalai & Mark A. Satterthwaite**676 Strategic Behavior and Competition: An Overview***by*Ehud Kalai**674 Efficient Allocation***by*Stanley Reiter**671 Axiomatic Foundations of Bayesian Decision Theory***by*Roger B. Myerson**633 Structure of Consumption Sets and Existence of Equilibria in Infinite Dimensional Spaces***by*Kerry Back

### 1985

**708 The Rate At Which a Simple Market Becomes Efficient as the Number of Traders Increases: An Asymptotic Result for Optimal Trading Mechanisms***by*Thomas A. Gresik & Mark A. Satterthwaite**707 Price Advertising and the Deterioration of Product Quality***by*William P. Rogerson**697 The Dissipation of Profits by Brand Name Investment and Entry When Price Guarantees Quality***by*William P. Rogerson**687 The Use of Options in Generating and Pricing Return Streams***by*James Bergin**685 On Communication, Bounded Complexity, and Cooperation***by*Eitan Zemel**673 Optimal Consumption Plans and Portfolio Management with Duration- Dependent Returns***by*Yves Balcer & Kenneth L. Judd**672 Inference in the Explosive First-Order Linear Dynamic Regression Model***by*Ian Domowitz & Lars Muus**670 A Theory of Preemptive Takeover Bidding***by*Michael J. Fishman**669 One is Almost Enough for Monopoly***by*Lawrence Ausubel & Raymond Deneckere**668 Reputation Effect in Equilibrium Search and Bargaining- A Stigma Theory of Unemployment Duration***by*Elazar Berkovitch**667 A Theory of Acquisition Markets - Mergers vs. Tender Offers***by*Elazar Berkovitch & Naveen Khanna**666 Negotiation and Arbitration: A Game-Theoretic Perspective***by*Robert J. Weber**665 Optimal License Fees for a New Product***by*Morton I. Kamien**664R Comparing Auctions for Risk Averse Buyers: A Buyer's Pointof View***by*Steven A. Matthews**663 Game Forms with Minimal Strategy Spaces***by*Stefan Reichelstein & Stanley Reiter**662 Implicit Labor Contracts to Explain Turnover***by*Elazar Berkovitch**661 Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening***by*Steven Matthews & John Moore**660 Probabilistic Analysis of the Capacitated Transportation Problem***by*Refael Hassin & Eitan Zemel**659 The Role of External Search in Bilateral Bargaining***by*S. D. Chikte & S.D. Deshmukh**658 Negotiation in Games: A Theoretical Overview***by*Roger B. Myerson**656 Average Waiting Time in Queues with Scheduled Batch Services***by*Suleyman Ozekici**655 Minimal Euclidean Networks with Flow Dependent Costs--The Generalized Steiner Case***by*Dan Trietsch**654 Optimal Motion Towards a Stochastic Destination***by*Dan Trietsch**653 Convergence of Information***by*Kevin D. Cotter**652 A Measure for Crisis Instability***by*Barry O'Neill**651 Applications of a Crisis Instability Index: Arms Control Agreements and Space-Based Missile Defenses***by*Barry O'Neill**650 International Escalation and the Dollar Auction***by*Barry O'Neill**649 On Neighboring Consumers***by*Kerry Back**648 Incentive Compatibility Ten Years Later***by*Theodore Groves & John O. Ledyard**647 Closed-Loop Equilibrium in a Multi-Stage Innovation Race***by*Kenneth L. Judd**646 Comprehensive Design of Highway Networks***by*Dan Trietsch**645 A Family of Methods for Preliminary Highway Alighnment***by*Dan Trietsch**644 Optimum Product Diversity and the Incentives for Entry in Large Economies***by*Larry E. Jones**641 The Rate at Which a Simple Market Becomes Efficient as the Number of Traders Increases: An Asymptotic Result for Optimal Trading Mechanisms***by*Thomas A. Gresik & Mark A. Satterthwaite**640 Connecting Euclidean Networks---The Steiner Case***by*Dan Treitsch**639R Some Notes on Natural Cubic Spline Functions, Nonlinear Regression and the Elastica***by*Dan Treitsch**638 The Optimal Ranking Method is the Borda Count***by*Donald G. Saari**637 A Case Against Bullet, Approval and Plurality Voting***by*Donald G. Saari & Jill Van Newenhizen

### 1984

**682 The Macroeconomic Effects of Uncertain Fiscal Policy***by*Kenneth L. Judd**675 Excess Capacity and Collusion***by*Carl Davidson & Raymond Deneckere**657 Incentive Compatibility Problems in Soviet-Type Economies***by*Richard Ericson**643 The Welfare Cost of Factor Taxation in a Perfect Foresight Model***by*Kenneth L. Judd**642 Equilibrium Incentives in Oligopoly***by*Chaim Fershtman & Kenneth L Judd**636 Random Behavior in Numerical Analysis, Decision Theory, and Macrosystems: Some Impossibility Theorems***by*Donald G. Saari**635 An Improved Algorithm for Steiner Trees***by*Dan Trietch**634 The Economics of Quality Testing and Disclosure***by*Steven A. Matthews & Andrew Postlewaite**632 Augmenting Euclidean Networks--The Steinter Case***by*Dan Trietsch**630 Quit Probabilities and Job Tenure- On the Job Training or Matching?***by*Dale T. Mortensen**629 The Dynamics of Industry-Wide Learning***by*Nancy L. Stokey**628 Money and Interest in Cash-In-Advance Economy***by*Robert E. Lucas Jr. & Nancy L. Stokey**627 The Theory of Principal and Agent: Part 1***by*Ray Rees**625 Euler's Problem of Polygon Division and Full Steiner Topologies--A Duality***by*Dan Trietsch**624 General Equilibrium and Growth Under Uncertainty: The Turnpike Theory***by*Ramon Marimon**623 An Introduction to Game Theory***by*Roger B. Myerson**622 Market Structure and International Technology Transfer***by*Kisang Lee**621 International Technology Transfer and Technology Diffusion Effects***by*Kisang Lee**620 Price Adjustment Speed and Dynamic Duopolistic Competitors***by*Chaim Fershtman & Morton I. Kamien**619 Random Binary Search: A Randomizing Algorithm for Global Optimization in R1***by*Eitan Zemel**618 Banking Panics***by*V.V. Chari & Ravi Jagannathan**617 Layoffs and Unemployment Compensation as Social Instruments***by*V.V. Chari**616 Stochastic Specification of Cost and Production Relationships***by*Peter E. Rossi**615 A Stochastic Theory of Monopolistic Firms***by*Lode Li**613 An O (n log n) Randomizing Algorithm for the Weighted Euclidean l-Center Problem***by*Nimrod Megiddo & Eitan Zemel**612 Monopoly Bundling of Warranty and Quality When Quality is Unobservable***by*Thomas J. Holmes**611 Money and Prices in a Small Economy***by*Bjorn Wahlroos**609 The Source of Some Paradoxes from Social Choice and Probability***by*Donald G. Saari**608 A Stochastic Calculus Model of Continuous Trading: Optimal Portfolios***by*Stanley R. Pliska**607 The Representation Problem and the Efficiency of the Price Mechanism***by*Donald G. Saari**606 Efficiency, Adverse Selection, and Production***by*Kenneth L. Judd**605 How a Network of Processors Can Schedule its Work***by*Stanley Reiter**604 Turnpike Properties of Capital Accumulation Games***by*Chaim Fershtman & Eitan Muller**603S Dynamic Limit Pricing and Internal Finance***by*Kenneth L. Judd & Bruce C. Petersen**601 Competition and Two-Part Tarriffs***by*Beth Hayes**600 A Note on the Price Equilibrium Existence Problem in Banach Lattices***by*Larry E. Jones**598 Stock Returns***by*Bjorn Wahlroos & Tom Berglund**597 The Nash Bargaining Solution is Optimal***by*Eric van Damme**596 Special Problems Arising in the Study of Economies with Infinitely Many Commodities***by*Larry E. Jones**595S Managerial Task Assignment and Promotions***by*Joan E. Ricarti Costa**594 Job Search and Labor Market Analysis***by*Dale Mortensen**593 On Shortest Paths in Graphs with Random Weights***by*Refael Hassin & Eitan Zemel**592 The Slow Server Problem: A Queue with Stalling***by*Michael Rubinovitch**591 Acceptable and Predominant Correlated Equilibria***by*Roger B. Myerson**590 Multistage Games with Communication***by*Roger B. Myerson**589 Anomalies and Equilibrium Returns in a Small Stock Market***by*Bjorn Wahlroos & Tom Berglund**588 Convergence of Integrals Encountered in Dichotomous Dependent Variable Problems***by*Peter E. Rossi**587 The Characteristics Model***by*Larry E. Jones**586 Comparison of Alternative Functional Forms in Production***by*Peter E. Rossi**585R Monopoly Provision of Product Quality and Warranties***by*Steven Matthews & John Moore**583 Fees Versus Royalties and the Private Value of a Patent***by*Morton I. Kamien & Yair Tauman

### 1983

**631 Continuity of the Fenchel Transform of Convex Functions***by*Kerry Back**614 A Linear Time Randomizing Algorithm for Local Roots and Optima of Ranked Functions***by*Eitan Zemel**610 Uncertain Lifetimes***by*R. Glenn Hubbard**602 On Weighted Shapley Values***by*Ehud Kalai & Dov Samet**584S International Stockpiling Agreements as Responses to Commodity Shocks***by*R. Glenn Hubbard & Robert J. Weiner**582 Analysis of Two Bargaining Problems with Incomplete Information***by*Roger B. Myerson**581 Uncertain Lifetimes, Social Security, and Individual Saving***by*R. Glenn Hubbard**579 The January Effect on a Small Stock Market: Lumpy Information and Tax-Loss Selling***by*Bjorn Wahlroos & Tom Berglund**578 Entrusting Investment Decisions to Managers With Superior Information: The Delegation Problem***by*Salman Shah & Anjan V. Thakor**577 Credible Spatial Preemption***by*Kenneth L. Judd**576 The Private Value of a Patent: A Game Theoretic Analysis***by*Morton I. Kamien & Yair Tauman