Rationalizable Predatory Pricing

The Paradox of Predatory Pricing

Predatory pricing law attempts to keep prices low by harshly sanctioning prices that are anticompetitively low. The paradox of predatory pricing law is that even an analytically perfect specification of the line between predatory and innocent price cuts would result in deviations from optimal pricing because the very recognition of a predatory pricing offense will induce some firms to forgo inn...

Predatory Pricing: Rare Like a Unicorn?

Rationalizable Trade

“No-trade” theorems provide sufficient conditions for the absence of equilibrium trade between asymmetrically informed players.1 In this paper, we examine when trade is rationalizable. Since rationalizability is a weaker solution concept than equilibrium, trade is sometimes rationalizable, even when there is no equilibrium trade. We provide necessary and sufficient conditions for rationalizable...

Rationalizable voting

We derive necessary and sufficient conditions in order for binary voting choices over a finite number of pairs of alternatives to be consistent with voter preferences that admit concave utility representations. These conditions imply simple testable restrictions on the location of voters’ ideal points, and can be used to predict individual voting behavior. On the other hand, if the location of ...

Rationalizable implementation

We consider the implementation of social choice functions under complete information in rationalizable strategies. A strict (and thus stronger) version of the monotonicity condition introduced by Maskin (1999) is necessary under the solution concept of rationalizability. Assuming the social choice function is responsive (i.e., it never selects the same outcome in two distinct states), we show t...