(with Rajiv Vohra), Games and Economic Behavior 26, 286–336, 1999.
Summary. Consider an environment with widespread externalities, and suppose that binding agreements can be written. We study coalition formation in such a setting. Our analysis proceeds by defining on a partition function an extensive-form bargaining game. We establish the existence of a stationary subgame perfect equilibrium. Our main results are concerned with the characterization of equilibrium coalition structures. We develop an algorithm that generates such a structure. Our characterization results are especially sharp for symmetric partition functions.
(with Rajiv Vohra), Journal of Political Economy 109, 1355-1384, 2001.
Summary. We study the provision of public goods when all agents have complete information and can write binding agreements. The focus is on coalition formation as a potential source of inefficiency.
(with Garance Genicot), Journal of Development Economics79, 398-412, 2006.
Summary. In a credit market with enforcement constraints, we study the effects of a change in the outside options of a potential defaulter on the terms of the credit contract, as well as on borrower payoffs. The results crucially depend on the allocation of “bargaining power” between the borrower and the lender. We prove that there is a crucial threshold of relative weights such that if the borrower has power that exceeds this threshold, her expected utility must go up whenever her outside options come down. But if the borrower has less power than this threshold, her expected payoff must come down with her outside options. These disparate findings within a single model permit us to interpret existing literature on credit markets in a unified way.
