We model the effect of contract parameters such as price rebates and after-sales warranty costs on the choice of quality by a supplier, the inspection policy of a producer, and the resulting end product quality. Both noncooperative and cooperative settings are explored. The paper's contribution is to highlight the importance of strategic and contractual issues in quality management.quality control, inspection, game theory

No abstract

No abstract

No abstract

Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in many economic contexts. Focussing on start-up finance for businesses, optimism may be responsible for or consistent with features such as credit rationing or redlining that are normally taken as symptoms of under-provision of finance requiring intervention to expand lending. Optimism leads to the opposite conclusion, at least if it is legitimate to use fiscal policy to counteract systematic error. The paper reports on an experiment in which, due to optimism, the lower the prizes to entrepreneurial activity the higher the subjects income. * We are grateful to Simon Parker, Alfons Weichenrieder and an anonymous referee for very helpful comments.

No abstract

No abstract

We present a two-sided search model in which individuals from two groups (males and females, employers and workers) would like to form a long term relationship with a highly ranked individual of the other group, but are limited to individuals who they randomly encounter and to those who also accept them.This article completes the research program, begun in Alpern and Reyniers (1999), of providing a game theoretic analysis for the Kalick-Hamilton (1986) mating model in which a cohort of males and females of various 'fitness' or 'attractiveness' levels are randomly paired in successive periods and mate if they accept each other. Their model compared two acceptance rules chosen to represent homotypic (similarity) preferences and common (or 'type') preferences. Our earlier paper modeled the first kind by assuming that if a level x male mates with a level y female, both get utility − |x − y| , whereas this paper models the second kind by giving the male utility y and the female utility x.Our model can also be seen as a continuous generalization of the discrete fitness-level game of Johnstone (1997). We establish the existence of equilibium strategy pairs, give examples of multiple equilibria, and conditions guaranteeing uniqueness. In all equilibria individuals become less choosy over time, with high fitness individuals pairing off with each other first, leaving the rest to pair off later. This route to assortative mating was suggested by Parker (1983). If the initial fitness distributions have atoms, then mixed strategy equilibria may also occur. If these distributions are unknown, there are equilibria in which only individuals in the same fitness band are mated, as in the steady state model of MacNamara and Collins (1990) for the job search problem.