Ph.d.-forsvar: Ole Jann: "Multiple Equilibria in Markets and Games"
This thesis deals with economic problems where decisions are interdependent, and where there can be several possible equilibria. This is the case, for example, in financial markets where the choices of people who fear a market crash influence the probability of a market crash. In such situations, people's beliefs can be self-fulfilling. The thesis consists of five self-contained essays. The first considers how information aggregation in financial markets can break down if informed people are uncertain about the information that other people have. In the second essay, written with Christoph Schottmueller, we analyze the problem of defending against coordinated attacks, such as speculative attacks against currencies or revolutions. It turns out that a 230-year old idea by Jeremy Bentham has surprising relevance for this problem.
The third essay considers risk-taking by firms. I show that there is an implicit risk-capacity constraint, as firms only want to take risks if not too many other firms take risks. That leads to strategic behavior which can exacerbate financial crises. In the fourth essay, written with Christoph Schottmueller, we generalize the Bertrand paradox, one of the most well-known results in microeconomics. Finally, in the fifth essay, also written with Christoph Schottmueller, we develop an informational theory of privacy and explain why privacy can be welfare-enhancing even though it creates information asymmetries.