| The first two chapters explore optimal learning in repeated pure coordination games. The coordination games here are characterized by the fact that the players not only lack a common description of the game, but also that this is not common knowledge. In game-theoretic terms this situation is characterized by a lack of common language and common knowledge , where traditionally both these assumptions have played an integral role in the framework of game theory. The lack of a common description or common language is explained through differences in cognition between players and such differences in cognitive ability or perceptive ability is captured through the notion of language, where a language is formally defined as a collection of labelings of a finite set of objects. A departure from the notion of common knowledge is then introduced by allowing sets of players to have incomplete ‘frames of reference’ for the game. This framework differs from the usual incomplete information Bayesian Games, since allowing players to know the support of the ‘type’ distribution removes the novelty associated with interactions between players with strictly private perceptions. In the first chapter, I provide a theoretical analysis of optimal learning strategies, while the second chapter tests the theoretical predictions through an experiment.; The third chapter analyzes the effect of price-floors on strategic decision making by firms selling differentiated products. The practice of price-floors imposed by manufacturers on retailers, called ‘Resale Price Maintenance’ (RPM), is held as per se illegal according to the present interpretation of the anti-trust laws. This chapter tries to show that price-floors can have pro-competitive effects; through the paradoxical finding that price-floors can actually reduce equilibrium prices. The model shows that the imposition of a price-floor leads to a decline in price charged by retailers, provision of uniformly better quality products and promotes entry. I thereby argue for a rule of reason approach, i.e. discretionary powers to the courts towards the practice of a price-floor, since at least under some circumstances a price-floor could have positive welfare effects. |
