PEW: Juan Ortner



Event Description

We construct a model of collective search in which players gradually approach the Pareto frontier. The players have imperfect control over which improvements to the status quo will be considered. Inefficiency takes place due to the difficulty in finding improvements acceptable to both parties. The process is path dependent, with early agreements determining long-run outcomes. It may also be cyclical, as players alternate between being more and less accommodating. Our model provides a noncooperative foundation for the “Raiffa path”.