Open Access. Powered by Scholars. Published by Universities.®
- Discipline
- Keyword
- Publication
Articles 1 - 2 of 2
Full-Text Articles in Industrial Organization
Bilateral Bargaining With Externalities, Catherine De Fontenay, Joshua Gans
Bilateral Bargaining With Externalities, Catherine De Fontenay, Joshua Gans
Catherine de Fontenay
This paper provides an analysis of a non-cooperative pairwise bargaining game between agents in a network. We establish that there exists an equilibrium that generates a coalitional bargaining division of the reduced surplus that arises as a result of externalities between agents. That is, we provide a non-cooperative justification for a cooperative division of a non-cooperative surplus. The resulting division is akin to the Myerson-Shapley value with properties that are particularly useful and tractable in applications. We demonstrate this by examining buyer-seller networks and vertical foreclosure.
Grading Standards And Education Quality, Raphael Boleslavsky, Christopher Cotton
Grading Standards And Education Quality, Raphael Boleslavsky, Christopher Cotton
Raphael Boleslavsky
We consider a game in which schools compete to place graduates by investing in education quality and by choosing grading policies. In equilibrium, schools strategically adopt grading policies that do not perfectly reveal graduate ability to evaluators (including employers and graduate schools). We compare equilibrium outcomes when schools grade strategically to equilibrium outcomes when evaluators perfectly observe graduate ability. With strategic grading, grades are less informative, and evaluators rely less on grades and more on a school's quality when assessing graduates. Consequently, under strategic grading, schools have greater incentive to invest in quality, and this can improve evaluator welfare.