Essays in microeconomics

This thesis consists of two theoretical chapters, focusing on dynamic games, and one empirical chapter. In Chapter 1, I consider a repeated game in which, due to imperfect monitoring, no collusion can be sustained. I add a self-interested monitor who commits to generating an imperfect private signal of firmsâ actions and sends a public message. The monitor makes an offer specifying the precision of the signal generated and the amount to be paid in return. I show that with low monitoring cost, collusive equilibria exist. In the monitor's favorite collusive equilibrium, firmsâ payoffs are decreasing in the discount factor. My model helps explain the cartel agreements between the mafia and firms in legal industries in Italy and America. In Chapter 2, I consider a bargaining game with two types of players â rational and stubborn. Rational players choose demands at each point in time. Stubborn players are restricted to choose a bargaining strategy from a proper subset of strategies available to rational players. In the simplest case, stubborn players are restricted to choose from the set of "insistent" strategies that always make the same demand and never accept anything less. However, their initial choice of demand is unrestricted. I characterize the equilibria in this game, showing how the flexibility of the stubborn type changes equilibrium predictions. Chapter 3 estimates the effect of longer prison sentences on criminal asset recovery, using administrative, cross-sectional data on confiscation orders in the UK. Confiscation orders request convicted offenders to pay the value of their criminal assets, and specify a prison sentence to be served in the case of non-payment. Using a fuzzy RDD, I exploit discontinuous changes in the legal maximum of this prison sentence. There is evidence that longer prison sentences incentivize offenders to pay.