We study the ex ante incentive compatible core, and provide conditions under which the ex ante incentive compatible core is nonempty when agents are informationally small in the sense of McLean and Postlewaite (2002a, Econometrica, 70, 2421–2453).  2003 Elsevier Inc. All rights reserved. JEL classification: C71; D51; D82

How does an ex ante contract affect behavior in an ex post renegotiation game? We address this question in a canonical buyer-seller relationship with renegotiation. Our paper provides causal experimental evidence that an initial contract has a highly significant and economically important impact on renegotiation behavior that goes beyond the effect of contracts on bargaining threat points. We c...

We propose a new decision criterion under risk in which people extract both utility from anticipatory feelings ex ante and disutility from disappointment ex post. The decision maker chooses his degree of optimism, given that more optimism raises both the utility of ex ante feelings and the risk of disappointment ex post. We characterize the optimal beliefs and the preferences under risk generat...

As organizations continually implement changes to their information and communication technologies (ICT) infrastructure, change has become an increasing part of "business as usual". Managers are routinely requested to justify expenditure, explain business benefits, and provide ex-ante and ex-post evaluations of ICT initiatives. Ex-ante evaluation is defined as predictive evaluation, and is ofte...

THE AIM OF THIS PAPER is to study core convergence in economies with asymmetric information. We will argue that the positive results of Debreu and Scarf (1963) and Aumann (1964) do not extend to a model with incomplete information in which decisions are made at the interim stage.2 Consider first the case in which decisions are made at the ex-ante stage, i.e., before information is revealed to a...

This paper develops a dynamic general equilibrium model of an agricultural economy in which poor farmers borrow from rich farmers. Because output is stochastic (we allow for idiosyncratic and aggregate shocks), there may be default ex post. We compare equilibria with and without political intervention. Intervention takes the form of a moratorium and is decided by voting. When bad economic shock...

In Aumann (1995) and Aumann (1998), time is assumed implicitly in the description of games of perfect information, and it is part of the epistemic distinction between ex-ante and ex-post knowledge. We show that ex-post knowledge in these papers can be expressed by ex-ante knowledge and therefore epistemically, time is irrelevant to the analysis. Furthermore, we show that material rationality by...

This paper develops a positive model of informal justice in which rewards and punishments are not determined by an ex ante optimal contract but instead express the ex post moral sentiments of the arbitrating party. In our model, a third party arbitrator mediates a one-shot relationship between two players, one of whom can exert an externality on the other. Importantly, formal contracts are not ...

We consider a frictional market where buyers are uncoordinated and sellers cannot commit ex-ante to either a per-unit price or quantity of a divisible good. Sellers then can exploit their local monopoly power by adjusting prices or quantities once the local demand is realized. We find that when sellers can adjust quantities ex-post, there exists a unique symmetric equilibrium where the increase...

This paper analyses the extent of income inequality and opportunity inequality in 25 European countries. The present work contributes to understanding the origin of standard income inequality, helping to identify potential institutional setups that are associated to opportunity inequality. We distinguish between ex ante and ex post opportunity inequality. We find that ex ante equality of opport...