Eric Bennett Rasmusen

Bio: Eric Bennett Rasmusen is an academic researcher from Indiana University. The author has contributed to research in topics: Game theory & Judicial independence. The author has an hindex of 30, co-authored 190 publications receiving 5808 citations. Previous affiliations of Eric Bennett Rasmusen include Yale University & University of Oxford.

Games and Information: An Introduction to Game Theory

Abstract: List of Figures List of Tables List of Games Preface Contents and Purpose Changes in the Second Edition (1994) Changes in the Third Edition (2001) Changes in the Fourth Edition (2006) Using the Book The Level of Mathematics Other Books Contact Information Acknowledgements Introduction History Game Theory's Method Exemplifying Theory This Book's Style Notes PART 1: GAME THEORY 1 The Rules of the Game Definitions Dominated and Dominant Strategies: The Prisoner's Dilemma Iterated Dominance: The Battle of the Bismarck Sea Nash Equilibrium: Boxed Pigs, The Battle of the Sexes and Ranked Coordination Focal Points Notes Problems Classroom Game 2 Information The Strategic and Extensive Forms of a Game Information Sets Perfect, Certain, Symmetric, and Complete Information The Harsanyi Transformation and Bayesian Games Example: The Png Settlement Game Notes Problems Classroom Game 3 Mixed and Continuous Strategies Mixed Strategies: The Welfare Game The Payoff-equating Method and Games of Timing Mixed Strategies with General Parameters and N Players: The Civic Duty Game Randomizing is not Always Mixing: The Auditing Game Continuous Strategies: The Cournot Game Continuous Strategies: The Bertrand Game, Strategic Complements, and Strategic Substitutes Existence of Equilibrium Notes Problems Classroom Game 4 Dynamic Games with Symmetric Information Subgame Perfectness An Example of Perfectness: Entry Deterrence I Credible Threats, Sunk Costs, and the Open-Set Problem in the Game of Nuisance Suits Recoordination to Pareto-dominant Equilibria in Subgames: Pareto Perfection Notes Problems Classroom Game 5 Reputation and Repeated Games with Symmetric Information Finitely Repeated Games and the Chainstore Paradox Infinitely Repeated Games, Minimax Punishments, and the Folk Theorem Reputation: The One-sided Prisoner's Dilemma Product Quality in an Infinitely Repeated Game Markov Equilibria and Overlapping Generations: Customer Switching Costs Evolutionary Equilibrium: The Hawk-Dove Game Notes Problems Classroom Game 6 Dynamic Games with Incomplete Information Perfect Bayesian Equilibrium: Entry Deterrence II and III Refining Perfect Bayesian Equilibrium in the Entry Deterrence and PhD Admissions Games The Importance of Common Knowledge: Entry Deterrence IV and V Incomplete Information in the Repeated Prisoner's Dilemma: The Gang of Four Model The Axelrod Tournament Credit and the Age of the Firm: The Diamond Model Notes Problems Classroom Game PART 2: ASYMMETRIC INFORMATION 7 Moral Hazard: Hidden Actions Categories of Asymmetric Information Models A Principal-agent Model: The Production Game The Incentive Compatibility and Participation Constraints Optimal Contracts: The Broadway Game Notes Problems Classroom Game 8 Further Topics in Moral Hazard Efficiency Wages Tournaments Institutions and Agency Problems Renegotiation: The Repossession Game State-space Diagrams: Insurance Games I and II Joint Production by Many Agents: The Holmstrom Teams Model The Multitask Agency Problem Notes Problems Classroom Game 9 Adverse Selection Introduction: Production Game VI Adverse Selection under Certainty: Lemons I and II Heterogeneous Tastes: Lemons III and IV Adverse Selection under Uncertainty: Insurance Game III Market Microstructure A Variety of Applications Adverse Selection and Moral Hazard Combined: Production Game VII Notes Problems Classroom Game 10 Mechanism Design and Postcontractual Hidden Knowledge Mechanisms, Unravelling, Cross Checking, and the Revelation Principle Myerson Mechanism Design An Example of Postcontractual Hidden Knowledge: The Salesman Game The Groves Mechanism Price Discrimination Rate-of-return Regulation and Government Procurement Notes Problems Classroom Game 11 Signalling The Informed Player Moves First: Signalling Variants on the Signalling Model of Education General Comments on Signalling in Education The Informed Player Moves Second: Screening Two Signals: The Game of Underpricing New Stock Issues Signal Jamming and Limit Pricing Countersignalling Notes Problems Classroom Game PART 3: APPLICATIONS 12 Bargaining The Basic Bargaining Problem: Splitting a Pie The Nash Bargaining Solution Alternating Offers over Finite Time Alternating Offers over Infinite Time Incomplete Information Setting Up a Way to Bargain: The Myerson-Satterthwaite Mechanism Notes Problems Classroom Game 13 Auctions Values Private and Common, Continuous and Discrete Optimal Strategies under Different Rules in Private-value Auctions Revenue Equivalence, Risk Aversion, and Uncertainty Reserve Prices and the Marginal Revenue Approach Common-value Auctions and the Winner's Curse Asymmetric Equilibria, Affiliation, and Linkage: The Wallet Game Notes Problems Classroom Game 14 Pricing Quantities as Strategies: Cournot Equilibrium Revisited Capacity Constraints: The Edgeworth Paradox Location Models Comparative Statics and Supermodular Games Vertical Differentiation Durable Monopoly Notes Problems Classroom Game Mathematical Appendix Notation The Greek Alphabet Glossary Formulas and Functions Probability Distributions Supermodularity Fixed Point Theorems Genericity Discounting Risk References and Name Index Subject Index

Creating and Enforcing Norms, With Special Reference to Sanctions

Abstract: Two central puzzles about social norms are now they are enforced and how they are created or modified. The sanctions for the violation of a norm can be categorized as automatic, guilt, shame, informational, bilateral-costly, and multilateral-costly. Problems in creating and modifying norms are related to which sanctions are employed. We use our analysis of enforcement and creation of norms to analyze the scope of feasible government action either to promote desirable norms or to repress undesirable ones.

Cooperation in a repeated prisoners' dilemma with ostracism

Abstract: The unique Nash equilibrium of the finitely repeated n-person Prisoners' Dilemma calls for defection in all rounds. One way to enforce cooperation in groups is ostracism: players who defect are expelled. If the group's members prefer not to diminish its size, ostracism hurts the legitimate members of the group as well as the outcast, putting the credibility of the threat in doubt. Nonetheless, we show that ostracism can be effective in promoting cooperation with either finite or infinite rounds of play. The model can be applied to games other than the Prisoners' Dilemma, and ostracism can enforce inefficient as well as efficient outcomes.

Stigma and Self-Fulfilling Expectations of Criminality

Abstract: A convicted criminal suffers not only from public penalties but from stigma, the reluctance of others to interact with him economically and socially. Conviction can convey useful information about the convicted, which makes stigmatization an important and legitimate function of the criminal justice system quite apart from moral considerations. The magnitude of stigma depends on expectations and the crime rate, however, which can lead to multiple, Pareto-ranked equilibria with different amounts of crime.

A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades

Abstract: An informational cascade occurs when it is optimal for an individual, having observed the actions of those ahead of him, to follow the behavior of the preceding individual without regard to his own information. We argue that localized conformity of behavior and the fragility of mass behaviors can be explained by informational cascades.

A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades

Abstract: An informational cascade occurs when it is optimal for an individual, having observed the actions of those ahead of him, to follow the behavior of the preceding individual without regard to his own information. We argue that localized conformity of behavior and the fragility of mass behaviors can be explained by informational cascades.

Cooperation and Punishment in Public Goods Experiments

Abstract: This paper provides evidence that free riders are heavily punished even if punishment is costly and does not provide any material benefits for the punisher. The more free riders negatively deviate from the group standard the more they are punished. As a consequence, the existence of an opportunity for costly punishment causes a large increase in cooperation levels because potential free riders face a credible threat. We show, in particular, that in the presence of a costly punishment opportunity almost complete cooperation can be achieved and maintained although, under the standard assumptions of rationality and selfishness, there should be no cooperation at all. We also show that free riding causes strong negative emotions among cooperators. The intensity of these emotions is the stronger the more the free riders deviate from the group standard. Our results provide, therefore, support for the hypothesis that emotions are guarantors of credible threats.

Collective Action and the Evolution of Social Norms

Abstract: With the publication of The Logic of Collective Action in 1965, Mancur Olson challenged a cherished foundation of modern democratic thought that groups would tend to form and take collective action...

Cooperation and Punishment in Public Goods Experiments

Abstract: Casual evidence as well as daily experience suggest that many people have a strong aversion against being the 'sucker' in social dilemma situations. As a consequence, those who cooperate may be willing to punish free-riding, even if this is costly for them and even if they cannot expect future benefits from their punishment activities. A main purpose of this paper is to show experimentally that there is indeed a widespread willingness of the cooperators to punish the free-riders. Our results indicate that this holds true even if punishment is costly and does not provide any material benefits for the punisher. In addition, we provide evidence that free-riders are punished the more heavily the more they deviate from the cooperation levels of the cooperators. Potential free-riders, therefore, can avoid or at least reduce punishment by increasing their cooperation levels. This, in turn, suggests that in the presence of punishment opportunities there will be less free riding. Testing this conjecture is the other major aim of our paper.