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When actions by one agent force another to deviate from their agreements with a third, “victim” turns into “injurer” in the chain’s subsequent steps. Should the chain’s initiator be responsible only for the direct harm they cause or also bear some of the indirect losses they trigger? Through an axiomatic approach, we characterize the class of fixed-fraction rules, which strike a balance between incentives for accident prevention on the one hand and fairness in terms of how liabilities are assigned on the other. Their simple design make the rules ideal for practical implementation through smart contracts, enabling automated conflict resolution. This paper was accepted by Manel Baucells, behavioral economics and decision analysis. Funding: J. Gudmundsson and J. L. Hougaard gratefully acknowledge financial support from the Carlsberg Foundation [Grant CF18-1112].

Team collaborations in which each member's output is critical to the overall success present organizations with difficult coordination problems. Despite the need for communication in such situations, team members often fail to share essential information. To examine why team communication and coordination fail, we develop a formal model with boundedly rational team members that links team size with the incentives to coordinate and the costs of communication. We show that even very small communication costs are enough to offset the expected individual benefit of sharing information with the team. Absent effective routines, the least efficient outcome is the most likely in the short and long run. Further, simulations lend support to a number of organizational routines and responses: mandating communication improves coordination and more so if the mandate recurs periodically. Increasing the incentives to coordinate is more important than subsidizing communication costs, which often adds little value unless the subsidies cover the costs completely. The results match a broad range of findings from the experimental and organizational literature, help to explain and provide a theoretical foundation for why team collaborations involving several organizational units often fail, and suggest new tests for promising communication routines.

We study decentralized implementation of efficient outcomes through multilateral bargaining in the river sharing problem. We introduce a class of mechanisms in the form of two-stage games in which agents first announce consumption levels and then bargain over monetary compensations. The defining characteristic of a mechanism is the way it assigns bargaining power to agents as a consequence of their locations, inflows, and consumption decisions. We first determine which mechanisms give incentives to always allocate the water efficiently, in the sense that, regardless of the agents' benefit functions, equilibrium play always yields an efficient outcome. Among these, we take an axiomatic approach to single out three mechanisms that guarantee a fair division of the welfare gain obtained through cooperation along the river.

Can we reconcile stability with non-manipulability in two-sided matching problems by selecting lotteries over matchings? We parameterize, through sets of utility functions, how ordinal preferences induce preferences over lotteries and develop corresponding notions of ex-ante stability and non-manipulability. For most sets, the properties are incompatible. However, for the set of utility functions with increasing differences, stability and non-manipulability characterize Compromises and Rewards. This novel rule is fundamentally different from the one that has attracted most attention in the literature, Deferred Acceptance. We then derive complementary negative results that show that increasing differences essentially is a necessary condition for the properties to be compatible.

We examine the river sharing problem with a novel focus on implementing efficient outcomes. We introduce a class of two-stage games in which agents first announce desired levels of consumption and then bargain over monetary compensations. An outside observer with partial information connects the two stages by conditioning agents’ recognition probabilities in the second stage on the allocation realized in the first stage. We identify ways of setting recognition probabilities that give agents incentives to choose the efficient allocation of water all the while ensuring that the surplus obtained from efficient water usage ends up being shared in a fair way. In particular, we take an axiomatic approach to determine three new and implementable solutions.

Collaboration in teams in which each member's output is critical to the overall success present organizations with difficult coordination problems. We develop a model and run simulations to analyze how costly communication affects team coordination and output efficiency. We show that absent any organizational routines to structure team communication the least efficient outcome is the most frequent output. We then derive formal conditions and simulate efficiency gains for several communication routines that improve team coordination and efficiency. Our model and simulation results match a broad range of findings from the experimental and organizational literature, help explain and provide a theoretical foundation for why collaborations involving several organizational units often fail, and suggest new tests for promising communication routines.

We compare different preference restrictions that ensure the existence of a stable roommate matching. Some of these restrictions are generalized to allow for indifferences as well as incomplete preference lists, in the sense that an agent may prefer remaining single to matching with some agents. We also introduce a new type of cycles and in greater detail investigate the domain of preferences that have no such cycles. In particular, we show how the absence of these cycles relates to the “symmetric utilities hypothesis” by Rodrigues-Neto (J Econ Theory 135:545–550, 2007) when applied to roommate problems with weak preferences.

The aim of this study was to determine whether there are correlations between medication use for lower urinary tract symptoms/benign prostate hypertrophy (LUTS/BPH) and alteration in incidence and indications for transurethral resection of the prostate (TURP).The number of TURP patients between 1984 and 2008 in Iceland was obtained from hospital registries. The number of defined daily doses (DDDs) of 5-alpha-reductase inhibitors (5aRIs) and alpha-blockers (ABs) sold was obtained from the Icelandic Medicines Control Agency. Charts of all surgical BPH patients in Iceland from 1998 to 2008 were retrospectively reviewed. The main outcomes measures were: DDDs sold of 5aRIs and ABs, total numbers of TURP, indications for TURP and complications.After the introduction of ABs and 5aRIs, sales increased annually at a near linear rate. TURP rates peaked in 1992, then declined. In 2008, 81 and 3.4 of 1000 men over the age of 50 used LUTS/BPH medications or underwent TURP, respectively. There was an inverse correlation between LUTS/BPH medication use and (i) overall TURP (R(2) = 0.85), (ii) TURP done for absolute indications (R(2) = 0.91), and (iii) LUTS with (R(2) = 0.77) and (iv) without previous medical therapy (R(2) = 0.75). As medication use rose, fewer TURPs were performed for previous history of urinary retention, and more for recurrent urinary tract infections.Increased use of ABs and 5aRIs in the Icelandic population correlated with decreasing incidences of TURP procedures for both LUTS and absolute indications. The sequelae of BPH and indications for TURP are changing as medication use increases, although a clear causative link is hard to establish.

We present a polynomial time method for identifying the maximal set in excess demand at a given payoff vector. This set can be used in “large” partnership formation problems to identify the minimum element in the set of individually rational payoff vectors at which there is no overdemanded set of agents. This minimum element corresponds to the minimum Walrasian equilibrium price vector in a special case of the partnership formation problem.

A group of heterogeneous agents may form partnerships in pairs. All single agents as well as all partnerships generate values. If two agents choose to cooperate, they need to specify how to split their joint value among one another. In equilibrium, which may or may not exist, no agents have incentives to break up any existing partnerships or form new partnerships. This paper proposes a dynamic competitive adjustment process that always either finds an equilibrium or exclusively disproves the existence of any equilibrium in finitely many steps. When an equilibrium exists, partnership and revenue distribution will be automatically and endogenously determined by the process. Moreover, several fundamental properties of the equilibrium solution and the model are derived.

We study assignment games with externalities. The value that a firm and a worker create depends on the matching of the other firms and workers. We ask how the classical results on assignment games are affected by the presence of externalities. The answer is that they change dramatically. Though stable outcomes exist if agents are “pessimistic”, this is a knife-edge result: we show that there are problems in which the slightest optimism by a single pair erases all stable outcomes. If agents are sufficiently optimistic, then there need not exist stable outcomes even if externalities are vanishingly small. The negative result persists also when we impose a very restrictive structure on the values and the externalities. Furthermore, stability and efficiency no longer go hand in hand and the set of stable outcomes need not form a lattice with respect to the agents’ payoffs.