In a world of uncertainty in which a worker's performance is variable over time and average performance is unknown when hiring, how will employers determine compensation? We develop a monitoring and signaling model where information is symmetric and parties are risk neutral. Monitoring costs...

In an environment in which home firm costs are private information, home firm output can signal these costs to a foreign competitor and a home policy maker. High-cost home firms have an incentive to misrepresent themselves as low-cost. This is understood by the foreign firm and the home...

The empirical literature on legislator behavior attributes significant explanatory power to interest group vote scores. The literature has also dichotomized the interpretation of these scores as either ideological shirking or market signaling. Most studies simply regress a residualized vote...

We present a model where policies of free capital mobility can signal governments' future policies, but the informativeness of the signal depends on the path of world interest rates. Capital flows to "emerging markets" reflect investors' perception of these markets' political risk. With low...