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In this paper we conduct laboratory experiments to test the theory of strategic information transmission. Our experimental results strongly support the basic insight of the theory, namely, that less information is transmitted when preferences of the sender and the receiver diverge. Moreover, the average payoffs for the senders, the receivers, and the(More)
There are two fundamentally different views of the role of elections in policy formation. In one view, voters can affect candidates' policy choices: competition for votes induces politicians to move toward the center. In this view, elections have the effect of bringing about some degree of policy compromise. In the alternative view, voters merely elect(More)
This paper characterizes the revenue maximizing allocation mechanism for a risk neutral seller that owns N, possibly heterogeneous, objects and faces I risk neutral buyers. Buyers' payoffs depend on the entire allocation of objects, on their type, and on the types of all other buyers. Types are independently distributed. The formulation allows for(More)
We consider optimal capital allocation and managerial compensation mechanisms for decentralized ¯rms when division managers have an incentive to misrepresent project quality and to minimize privately costly but value-enhancing e®ort. We show that in the optimal mechanism ¯rms always underinvest in capital relative to a naive application of the net present(More)
the anonymous co-editor and referees for valuable comments and suggestions. Abstract: This paper considers a multi-stage dynamic R&D race in which the competitors strategically publish research findings. Publications change the prior art, thus affecting patentability. Firms publish when they are behind in the race and their rival is close to winning it.(More)
This paper studies an auction model in which the seller has private information about the object's characteristics that are valued by both the seller and potential buyers. In a general valuation model in which buyers' signals are affiliated, we identify sufficient conditions under which the seller can use reserve prices to credibly signal her private(More)
How does access to formal microinsurance affect economic development? We report results from a large randomized natural field experiment conducted in southwestern China in the context of insurance for sows. We find that providing access to formal insurance significantly increases farmers' tendency to raise sows. We argue that this finding also suggests that(More)