equilibrium, the option of delaying one’s' actions harms coordination and can induce severe coordination failures: if agents are … large returns. The risk-dominant equilibrium of the corresponding one-shot game is selected when the option to delay effort … is commensurate with the option to wait longer for others’' actions. In an application to innovation processes, we show …

pressure in one option contract increases its price by an amount proportional to the variance of the unhedgeable part of the … option. Similarly, the demand pressure increases the price of any other option by an amount proportional to the covariance of … show that demand-pressure effects contribute to well-known option-pricing puzzles. Indeed, time-series tests show that …