| My Ph.D. thesis consists of three papers on game theory and its applications in the fields of political economy and financial economics.; The first paper, Perfect Equilibrium and Lexicographic Beliefs , is joint work with Srihari Govindan. It extends the results of Blume, Brandenburger, and Dekel (1991) to obtain a finite characterization of perfect equilibria in terms of lexicographic probability systems (LPSs). The LPSs we consider are defined over individual strategy sets and thus capture the property of independence among players' actions. Our definition of a product LPS over joint actions of players is shown to be canonical, in the sense that any independent LPS on joint actions is essentially equivalent to a product LPS according to our definition.; The second paper, Primaries and the New Hampshire Effect, is joint work with Mattias Polborn. We develop a model of political competition between candidates in primary elections which allows us to study the effect of different temporal structures of the election process on its outcome. Candidates can partly control their winning probabilities in these elections by exerting campaign effort. We show that the expected rents of the candidates are substantially higher with sequential elections, compared to simultaneous ones. The model generates results that are consistent with several stylized facts about U.S. presidential primary races, such as the relatively high campaign spending in early primary states, the perceived importance and decisiveness of elections in these states, and the build-up of campaign momentum over time.; The third paper, Public Communication Devices in Financial Markets , studies the role of public communication devices for information aggregation in financial markets. The paper investigates the incentives for informed traders to reveal their information truthfully to the public. In the model, a subset of traders receives noisy signals about the value of the asset. Between trading periods, these agents post messages on a public communication device. The public reads these messages. Informative (i.e. fully revealing) equilibria exist if certain restrictions on feasible trades are imposed, the number of informed traders is large enough, and the amount of noise in the market is limited. |
