We examine a new class of games, which we call social games, where players not only choose strategies but also choose with whom they play. A group of players who are dissatisfied with the play of their current partners can join together and play a new equilibrium. This imposes new refinements on equilibrium play, where play depends on the relative populations of players in different roles, amon...

Most matching models of the marriage market assume increasing returns to scale, that is, they postulate that a larger pool of eligibles will lead to a higher marriage rate. Empirically, the difficulty in studying the cross-section relationship between the size of the marriage market and marriage behavior is that, in general, market size is endogenous. We address this issue in two ways. First, w...

Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard efficiency wage model in order to allow for behavioral substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the...

Competition, Hidden Information and Efficiency: An Experiment We devise an experiment to explore the effect of different degrees of competition on optimal contracts in a hidden-information context. In our benchmark case, each principal is matched with one agent of unknown type. In our second treatment, a principal can select one of three agents, while in a third treatment an agent may choose be...

We analyze a game in which firms with private information compete for workers by making a single salary offer. Once salaries are chosen, firms make offers to workers, who care only about salary. Firms and workers are matched according to the Gale-Shapley deferred acceptance algorithm that dominates the theory of two-sided matching. For a two-firm, two-worker model, we prove existence of a Bayes...

We aim at investigating to what extent reciprocal considerations, exhibited by employers and employees, should lead to stable gift exchange practices in the labor contract, giving rise to noncompensating wage differentials among industries. We use the concept of Sequential Reciprocity Equilibrium developed by Dufwenberg & Kirchsteiger (1998) to incorporate players’ preferences for reciprocity i...

BACKGROUND Bronchiolitis obliterans, an irreversible lung disease, was first associated with inhalation of butter flavorings (diacetyl) in workers at a microwave popcorn company. Excess rates of lung-function abnormalities were related to cumulative diacetyl exposure. Because information on potential excess mortality would support development of permissible exposure limits for diacetyl, we inve...

I propose a model of bargaining between workers and large firms that resembles the Stole and Zwiebel (1996a,b) model, but has the desirable feature that workers and firms behave in a privately efficient manner. I assume that on hiring, firms and workers can contract to behave efficiently in the future, while maintaining the assumption that the marginal surplus associated with the match is split...

Gross Worker Flows in the Presence of Informal Labor Markets: Evidence from Mexico, 1987-2002 This paper applies recent advances in the study of labor market dynamics to a representative developing country with a large unregulated of “informal” sector. It confirms the relevance of the recent mainstream models and debates surrounding gross worker flows to the developing country context, and offe...