Publication in The Review of Economic Studies

An article by ICEF Associate Professor Emiliano Catonini "Self-enforcing agreements and forward induction reasoning" is published in The Review of Economic Studies - one of the top 5 journals in economics. Professor Catonini became the first HSE researcher, whose single-authored paper was published there.

Here is an abstract of the interview Emiliano Catonini gave to HSE portal:

In economics we are used to assume that agents behave in some sort of equilibrium fashion, where everybody knows exactly what the others are going to do and best replies accordingly. But this is far from true in reality, especially when the agents have never interacted before, and promises are the only mean of coordination they have.

So, I consider agents who reach only a partial agreement, or understanding, of how they will play, and then reason strategically about each other’s promises and unexpected moves. What does a deviation from the agreement suggest about the future intentions of my partner? Will re-coordination ensue, or we clearly have different expectations at this point? The idea that agents will always re-coordinate, which is a typical assumption in economics, clashes with strategic reasoning and the typical behavior of real players.

I obtained different predictions. For instance, in the famous Hotelling problem, traditional game theory predicts that the two competing sellers will position themselves at the center of the beach or at the extremes of the beach depending on the assumptions. I do not kill the uncertainty with “equilibrium at every cost".

The Review of Economic Studies is one of the top 5 journals in economics. Most of the groundbreaking research is published in the top 5. Leading world universities including Harvard, Princeton, London School of Economics and others target to publish in such journals. ICEF Associate Professor Emiliano Catonini is the first HSE researcher, whose single-authored article published in The Review of Economic Studies.

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