Showing 1 - 10 of 8,249
This paper provides a model of investment timing by managers in a decentralized firm in the presence of agency conflicts and information asymmetries. When investment decisions are delegated to managers, contracts must be designed to provide incentives for managers to both extend effort and...
Persistent link: https://www.econbiz.de/10012467537
We study the optimal provision of insurance against unobservable idiosyncratic shocks in a setting in which a benevolent government cannot commit. A continuum of agents and the government play an infinitely repeated game. Actions of the government are constrained only by the threat of reverting...
Persistent link: https://www.econbiz.de/10012458032
In labor markets, the ratchet effect refers to a situation where workers subject to performance pay choose to restrict their output, because they rationally anticipate that firms will respond to higher output levels by raising output requirements or cutting pay. We model this effect as a...
Persistent link: https://www.econbiz.de/10012462331
Stock-based compensation is the standard solution to agency problems between shareholders and managers. In a dynamic rational expectations equilibrium model with asymmetric information we show that although stock-based compensation causes managers to work harder, it also induces them to hide any...
Persistent link: https://www.econbiz.de/10012464915
Foreign direct investment (FDI) is observed to be a predominant form of capital flows to low and middle income countries with insufficiently developed capital markets. This paper analyzes the problem of channeling domestic savings into productive investment in the presence of asymmetric...
Persistent link: https://www.econbiz.de/10012472477
We examine the determinants and implications of holdings of cash and marketable" securities by publicly traded U.S. firms in the 1971-1994 period. Firms with strong growth" opportunities and riskier cash flows hold relatively high ratios of cash to total assets. Firms" that have the greatest...
Persistent link: https://www.econbiz.de/10012472578
We study a flexible dynamic savings game in continuous time, where decision makers rotate in and out of power. These agents value spending more highly while in power creating a time-inconsistency problem. We provide a sharp characterization of Markov equilibria. Our analysis proceeds by...
Persistent link: https://www.econbiz.de/10012456666
conflict when defense capability is fixed, but may allow for security and prosperity when defense capability is endogenous … of conflict and stagnation. We illustrate the model by analyzing the rise of civilization in Sumeria and Egypt, the first …
Persistent link: https://www.econbiz.de/10012456842
American politics have been characterized by a high degree of partisan conflict in recent years. Combined with a … this end, I construct a novel high- frequency indicator of partisan conflict. The partisan conflict index (PCI) uses a … may help explain the slow recovery observed since the 2007 recession ended. Partisan conflict is also associated with …
Persistent link: https://www.econbiz.de/10012457394
We propose a model of cycles of distrust and conflict. Overlapping generations of agents from two groups sequentially … a sequence of bad actions originated. Assuming that both sides are not extremists, spirals of distrust and conflict get … this mechanism can be useful in interpreting cycles of ethnic conflict and international war, and how it also emerges in …
Persistent link: https://www.econbiz.de/10012460403