Eric Maskin
Princeton University
Network
Latest external collaboration on country level. Dive into details by clicking on the dots.
Publication
Featured researches published by Eric Maskin.
The Review of Economic Studies | 1995
Mathias Dewatripont; Eric Maskin
We study a credit model where, because of adverse selection, unprofitable projects may nevertheless be financed. Indeed they may continue to be financed even when shown to be low-quality if sunk costs have already been incurred. We show that credit decentralization offers a way for creditors to commit not to refinance such projects, thereby discouraging entrepreneurs from undertaking them initially. Thus, decentralization provides financial discipline. Nevertheless, we argue that it puts too high a premium on short-term returns. The model seems pertinent to two issues: Soft budget constraint problems in centralized economies, and differences between Anglo-Saxon and German-Japanese” financing.
Econometrica | 1994
Drew Fudenberg; David K. Levine; Eric Maskin
The authors study repeated games in which players observe a public outcome that imperfectly signals the actions played. They provide conditions guaranteeing that any feasible, individually rational payoff vector of the stage game can arise as a perfect equilibrium of the repeated game with sufficiently little discounting. The central condition requires that there exist action profiles with the property that, for any two players, no two deviations--one by either player--give rise to the same probability distribution over public outcomes. The results apply to principal-agent, partnership, oligopoly, and mechanism-design models, and to one-shot games with transferable utilities. Copyright 1994 by The Econometric Society.
The Review of Economic Studies | 1979
Partha Dasgupta; Peter J. Hammond; Eric Maskin
We shall assume that the objectives of a society are embodied in a certain social choice rule. A social choice rule (SCR) selects a set of feasible social states for each possible configuration of individual preferences and other characteristics. One interprets the choice set as the set of welfare optima. For example, given an Arrow social welfare function which embodies individual preferences in a social ordering, then a natural social choice rule is derived by maximizing this social ordering over the feasible set. Alternatively, the Pareto rule is the social choice rule which selects all Pareto efficient states, given individual preferences and the feasible set. These are two particular social choice rules which have received much attention, but our discussion will cover social choice rules in general. If the relevant characteristics of individual agents, such as preferences, happen to be publicly known, then the social choice rule can be implemented trivially because the choice set itself is known. The problem of incentive compatibility arises precisely because these characteristics are not known by the planner a priori. The planner may attempt to learn characteristics directly by asking agents to reveal them. In general, however, if the agents realize how the information they reveal is to be used, they will have an incentive to misrepresent. Then the task of the planner in implementing the social choice rule is more difficult. Obviously, he must use a planning mechanism of some kind, whose outcomes are possible social states. We shall assume that, when he devises the mechanism, the planner knows what social states are feasible, so that he can ensure that the final outcome is feasible. (See, however, Hurwicz, Maskin and Postlewaite (1978), which considers the more general problem where feasibility itself depends on unknown characteristics.) The planner, however, relies on signals from the individual agents to help him implement the social choice rule. It is assumed that each individual agent sends his own signal. The planners mechanism is then a rule which specifies a social state for each list of signals sent by the individual agents. It is assumed that each agent knows the precise form of the mechanism the planner is using. Then each agent realizes that he is involved in a game, because the outcome of the mechanism depends on the signals which he and all the other
The RAND Journal of Economics | 2009
James E. Bessen; Eric Maskin
We argue that when innovation is “sequential” (so that each successive invention builds in an essential way on its predecessors) and “complementary” (so that each potential innovator takes a different research line), patent protection is not as useful for encouraging innovation as in a static setting. Indeed, society and even inventors themselves may be better off without such protection. Furthermore, an inventors prospective profit may actually be enhanced by competition and imitation. Our sequential model of innovation appears to explain evidence from a natural experiment in the software industry.
The Review of Economic Studies | 1999
Eric Maskin; Jean Tirole
We scrutinize the conceptual framework commonly used in the incomplete contract literature. This literature usually assumes that contractual incompleteness is due to the transaction costs of describing—or of even foreseeing—the possible states of nature in advance. We argue, however, that such transaction costs need not interfere with optimal contracting (i.e. transaction costs need not be relevant), provided that agents can probabilistically forecast their possible future payoffs (even if other aspects of the state of the nature cannot be forecast). In other words, all that is required for optimality is that agents be able to perform dynamic programming, an assumption always invoked by the incomplete contract literature. The foregoing optimality result holds very generally provided that parties can commit themselves not to renegotiate. Moreover, we point out that renegotiation may be hard to reconcile with a framework that otherwise presumes perfect rationality. However, even if renegotiation is allowed, the result still remains valid provided that parties are risk averse.
Journal of Economic Theory | 2001
Eric Maskin; Jean Tirole
Abstract We define Markov strategy and Markov perfect equilibrium (MPE) for games with observable actions. Informally, a Markov strategy depends only on payoff-relevant past events. More precisely, it is measurable with respect to the coarsest partition of histories for which, if all other players use measurable strategies, each players decision-problem is also measurable. For many games, this definition is equivalent to a simple affine invariance condition. We also show that an MPE is generically robust: if payoffs of a generic game are perturbed, there exists an almost Markovian equilibrium in the perturbed game near the initial MPE. Journal of Economic Literature Classification Numbers: C72, C73.
The American Economic Review | 2004
Eric Maskin; Jean Tirole
We build a simple model to capture the major virtues and drawbacks of making public officials accountable (i.e., subjecting them to reelection): On the one hand, accountablity allows the public to screen and discipline their officials; on the other, it may induce those officials to pander to public opinion and put too little weight on minority welfare. We study when decision-making powers should be allocated to the public directly (direct democracy), to accountable officials (called “politicians”), or to nonaccountable officials (called “judges”).
Econometrica | 1988
Eric Maskin; Jean Tirole
The authors introduce a class of alternating-move, infinite-horizon models of duopoly. The timing captures the presence of short-run commitment s. They apply this framework to a natural monopoly in which costs are so large that at most one firm can make a profit. The firms install short-run capacity. In the unique symmetric Markov perfect equilibriu m, only one firm is active and practices the quantity analogue of lim it pricing. For commitments of brief duration, the market is almost c ontestable. The authors conclude with a discussion of more general mo dels where the alternating timing is derived rather than imposed. Copyright 1988 by The Econometric Society.
The Bell Journal of Economics | 1979
Peter A. Diamond; Eric Maskin
We study the steady-state equilibrium of models where individuals meet pairwise in a costly stochastic search process and negotiate contracts to product output. Different meetings yield different outputs, and so an individual in a contract may wish to continue search to find a better match. If he is successful, he will break his original contract. In anticipation of possible breaches, contracts may provide for compensation to be paid to the breached-against partner. We examine the effects that several alternative damage rules have on equilibrium search and breach behavior.
The Review of Economic Studies | 2000
Eric Maskin; John G. Riley
There is a voluminous theoretical literature on sealed high-bid auctions (auctions in which bids are sealed and the high bidder pays his bid). See for example, Vickery (1961), Myerson (1981), riley and Samuelson (1981), Milgrom and Weber (1982), Mathews (1983), Maskin and Riley (1984), Holt(1980) Cox, Smith and Walker (1988). A critical property on which this literature relies is the existence of equilibrium in which buyers? bidding strategies are monotonic in their types. This enables the analyst to perform comparative statics as the distribution of types changes, and to compare the welfare properties of the high-bid auction with those of other auction institutions.