Cash is the only retail payment system that requires no system of accounts for counter-parties to transact. The only record of its possession is its tangible presence. Any two parties that can meet face to face can exchange cash without worrying about payment clearing and settlement, default...

We develop a method for solving for equilibrium outcomes in stationary strategic settings in which speculators are informationally large and understand how their actions affect the information content of prices. This allows us to characterize speculation by institutional investors who receive...

In an economy with a continuum of individuals, each individual has a stochastic, continuously evolving endowment process. Individuals are risk averse and would therefore like to insure their endowment processes. It is feasible to obtain insurance by pooling endowments across individuals because...

A stochastic process impinges on an agent and a principal in distinct ways. From the agent's perspective the process is noise that interferes with his perception of productivity states, leading him to sometimes take actions that are in retrospect mistaken. From the principal's perspective the...

We study anti-competitive mergers in a dynamic model with noisy collusion. At each instant, firms either privately choose output levels or merge, which trades off benefits of avoiding price wars against the costs of merging. There are three results. First, mergers are optimal when collusion...