Showing 1 - 10 of 55
Persistent link: https://www.econbiz.de/10005482163
Heightened counterparty risk during the recent financial crisis has raised questions about the role clearinghouses play in global financial stability. Empirical identification of the effect of centralized clearing on counterparty risk is challenging because of the co-incidence of macro-economic...
Persistent link: https://www.econbiz.de/10010969403
Typically, venture capital contracts feature stage financing where both parties commit to prohibiting {\em de novo} financing at each stage. The objective of this paper is to explain how these long--term contracts deal with entrepreneurial short--termism. We study an environment where...
Persistent link: https://www.econbiz.de/10005027532
A standard presumption of market microstructure models is that competition between risk neutral market makers inevitably leads to prices schedules that leave market makers zero expected profits conditional on the order flows. This paper shows that this result does not hold when traders can split...
Persistent link: https://www.econbiz.de/10005653173
The television game show The Price Is Right is used as a laboratory to conduct a preference-free test of rational decision theory in an environment with substantial economic incentives. It is found that contestants' strategies are transparently suboptimal. In response to this evidence, simple...
Persistent link: https://www.econbiz.de/10005573079
We develop and test a structural asymmetric information transaction model to characterize the price impact of information on the NYSE. Unlike previous literature, we allow for mixed entry strategies on the part of informed traders and obtain an equilibrium where trades are temporally separated....
Persistent link: https://www.econbiz.de/10005688343
We argue that competition between dealers in a classic dealer market is intertemporal: A trader identifies a particular dealer and negotiates a final price with only the intertemporal threat to switch dealers imposing pricing discipline on the dealer. In this kind of market structure, we show...
Persistent link: https://www.econbiz.de/10005743910
This paper investigates how noisy evaluation of worker skills affects human capital investments and hiring. Individuals distort investments toward skills that most managers can evaluate. Dynamically, when workers become managers, managerial expertise can become increasingly skewed over time,...
Persistent link: https://www.econbiz.de/10005757252
We use the founding of the Federal Reserve as a historical experiment to provide some insight into whether a lender of last resort can stabilize financial markets. Following the Panic of 1907, Congress passed two measures that established a lender of last resort in the United States: (1) the...
Persistent link: https://www.econbiz.de/10005718299
We study insider trading in a dynamic setting. Rational, but uninformed, traders choose between investment projects with different levels of insider trading Insider trading distorts investment toward assets with less private information. However, when investment is sufficiently information...
Persistent link: https://www.econbiz.de/10005447410