See the seminar's full schedule here: Alberto Alesina Seminar on Political Economy
Germán Gieczewski (Princeton), "Noisy Screening and Brinkmanship"
I study a bilateral relationship subject to termination. One player, the proposer, demands a transfer in each period. The receiver can accept and continue the relationship or quit permanently. Her reservation value is persistent and privately known, but also affected by small, transient shocks. I show that the proposer's demands may escalate over time, far beyond the one-shot optimum, and even to the point that every receiver type eventually quits. Major escalations may alternate with periods of slow ratcheting, and exit may be inevitable even if the proposer has commitment power. Encroachment is tempting because small escalations induce exit only if the receiver's type is marginal and her shock unfavorable. When the receiver does not quit after an escalation, the proposer updates upward on her type, inviting further escalation. The model captures the logic of encroachment in international disputes, democratic backsliding, labor exploitation, and abuse of market power.
Co-sponsored by FAS and IQSS, the Alberto Alesina Seminar on Political Economy supports research-related activities that integrate the study of economics and politics, whether by studying economic behavior in the political process or political behavior in the marketplace. In general, positive political economy is concerned with showing how observed differences among institutions affect political and economic outcomes in various social, economic, and political systems and how the institutions themselves change and develop in response to individual and collective beliefs, preferences, and strategies.
Zoom links for the Alesina Seminar are distributed via the seminar's mailing list. You can subscribe to the Alesina Seminar Mailing List here.
See the seminar's full schedule at the Alesina Seminar page.
All interested faculty and students are invited to attend.
LOCATION:HBS Campus, Hawes 102 STATUS:CONFIRMED DTSTART:20250403T203000Z DTEND:20250403T214500Z END:VEVENT END:VCALENDAR