(with Doug Bernheim and Sevin Yeltekin), Econometrica 83 (5), 1877-1911, 2015. Online Appendix. A link to the 1999 version, which only had numerical results.
Summary. Poverty can perpetuate itself by undermining the capacity for self-control. Our main result demonstrates that low initial assets can limit self-control, trapping people in poverty, while those with high initial assets can accumulate indefinitely.
Econometrica 70, 547–582, 2002.
Summary. A principal and an agent enter into a sequence of agreements. The principal faces an interim participation constraint at each date, but can commit to the current agreement; in contrast, the agent has the opportunity to renege on the current agreement. We show that every constrained efficient sequence must, after a finite number of dates, exhibit a continuation that maximizes the agent’s payoff over all such sequences.
(with Rajiv Vohra). April 2025. Supplementary Notes.
Summary. We revisit Nash’s axiomatic approach to bargaining when both individuals and coalitions of individuals have outside options. As in Nash, our solution maximizes a (possibly weighted) product of payoffs net of individual disagreements, but coalitional threats appear as conventional constraints that are not netted out. We embed this solution into a setting with cross-coalitional externalities, and develop a “Nash-in-Nash” theory of viable coalitional structures. Every coalition follows its coalitional Nash solution but interacts noncooperatively with other coalitions, leading to a recursive determination of both threats and solutions. We discuss applications to public goods provision, R&D coalitions, and cartels in oligopolistic competition. Finally, for transferable utility characteristic functions, we connect the coalitional Nash solution to a notion of “pragmatic egalitarianism.”