This paper critiques Rothbard’s ([1962] 2004) concept of gross investment. Rothbard introduced the concept in order to demonstrate his point that it is not consumer spending that primarily drives the economy, like the mainstream Keynesian view maintains, but the capitalists’ spending. In...

The principles characterizing the traditional revenue-expense approach to accounting have never been “invented.” They are an institution that is the result of social evolution, not of human design. Therefore, the efforts to defend them against the balance sheet approach endorsed by...

The objective of our paper is to study R&D investments and pricing behavior in an environment with fundamental uncertainty. We designed a multi-period experiment in which each period consisted of two stages, an R&D phase and a pricing stage. Participants in the experiment had almost no...

Hart and Moore (2008) argue that varying degrees of flexibility in contracts induce differing reference points and aspiration levels for parties’ shares of a transaction’s total surplus. As a consequence, a trade-off between adaptational flexibility and the prevention of distributional...

In 1931 Harold Hotelling published his seminal contribution to the economic theory of exhaustible resources. His major insight states that the prices of exhaustible resources - more specifically the scarcity rent - will rise at the rate of interest, and consumption will decline over time. The...

We provide experimental evidence for the hypothesis that bounded rationality is an important element of the theory of the firm. We implement a simplified version of a mechanism that was designed in order to perfectly solve the holdup problem under conditions of perfect rationality (Maskin 2002)....