A security design model shows that multinational firms needing to finance their operations should issue different securities to investors in different countries in order to aggregate their disparate information about domestic and foreign cash flows. However, if the firm becomes bankrupt,...

We argue that some but not all superstitions can persist when learning is rational and players are patient, and illustrate our argument with an example inspired by the code of Hammurabi. The code specified an appeal by surviving in the river as a way of deciding whether an accusation was true,...

Typical models of bankruptcy and collateral rely on incomplete asset markets. In fact, bankruptcy and collateral add contingencies to asset markets. In some models, these contingencies can be used by consumers to achieve the same equilibrium allocations as in models with complete markets. In...

A security design model shows that multinational firms needing to finance their operations should issue different securities to investors in different countries in order to aggregate their disparate information about domestic and foreign cash flows. However, if the firm becomes bankrupt,...

We characterize transitions between stochastically stable states and relative ergodic probabilities in the theory of the evolution of conventions. We give an application to the fall of hegemonies in the evolutionary theory of institutions and conflict and illustrate the theory with the fall of...