Tomas Sjöström

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Two players simultaneously decide whether or not to acquire new weapons in an arms race game. Each player’s type determines his propensity to arm. Types are private information, and are independently drawn from a continuous distribution. With probability close to one, the best outcome for each player is for neither to acquire new weapons (although each(More)
Dual-process theories distinguish between intuition (fast and emotional) and reasoning (slow and controlled) as a basis for human decision-making. We contrast dominance-solvable games, which can be solved by step-by-step deliberative reasoning, with pure coordination games, which must be solved intuitively. Using functional magnetic resonance imaging, we(More)
We identify and investigate the basic ‘hold-up’ problem which arises whenever each party to a contingent contract has to pay some ex-ante cost for the contract to become feasible. We then proceed to show that, under plausible circumstances, a ‘contractual solution’ to this hold-up problem is not available. This is because a contractual solution to the(More)
We consider robust virtual implementation, where robustness is the requirement that implementation succeed in all type spaces coherent with a given payoff type space as well as with a given space of first-order beliefs about the other agents’ payoff types. This last bit, which constitutes our reinterpretation of the Wilson doctrine, allows us to obtain a(More)
† We thank anonymous referees and an associate editor for their useful comments. 2 ABSTRACT Strategy-proofness, requiring that truth-telling is a dominant strategy, is a standard concept used in social choice theory. Saijo et al. (2003) argue that this concept has serious drawbacks. In particular, many strategy-proof mechanisms have a continuum of Nash(More)
In order to calculate the worth of a coalition of players, the coalition needs to predict the actions of outsiders. We propose that, for a given solution concept, such predictions should be made by applying the solution concept to the “reduced society” consisting of the non-members. We illustrate by computing the r-core for the case of Bertrand competition(More)
Many believe that a key innovation by the Grameen Bank is to encourage borrowers to help each other in hard times. To analyse this, we study a mechanism design problem where borrowers share information about each other, but their limited side contracting ability prevents them from writing complete insurance contracts. We derive a lending mechanism which(More)
assume that third parties are not available. Given this assumption, the equilibrium outcome is not first-best efficient if contracts can be renegotiated. To be more specific, suppose an architect and a builder must cooperate to build a building. The quality of the building will depend on three things: the quality of the architect’s design, the builder’s(More)