In this Paper we use agency theory to study the active role of the CEO in the formulation of corporate strategy. We allow the agent (CEO) to play a role in defining the parameters of the agency problem, in an incomplete contracting model in which the agent can be rewarded based only on financial...

Religious people talk about things that cannot be seen, stories that cannot be verified, and beings and forces beyond the ordinary. Perhaps their gods are truly at work, or perhaps in human nature there is an impulse to proclaim religious knowledge. If so, it would have to have arisen by natural...

This paper develops a simple model of sovereign debt in which defaulting nations are excluded from capital markets and regain access by making partial repayments. This implication of the model is consistent with the historical evidence that defaulting countries return to international loan...

This paper discusses different aspects of the notion of systemic risk. It contains a selective survey of the research on related topics, a review of some case studies of financial crises and failures, and a discussion pointing toward the importance of moral hazard as a key element of systemic...

The aim of this paper is to explain patterns of household income within an urban area. A particular pattern common to US cities is for a concentration of the poor in the inner city, with higher-income households farther out, and then lower-income households even farther out. It is the...

We show that the amount of information in equilibrium increases in the expected profitability of the firm’s investments, and that this creates an amplification mechanism from changes in fundamentals to real value. Uncertainty about future performance has a non-trivial effect on information...

We apply the concept of exchangeable random variables to the case of non-additive robability distributions exhibiting ncertainty aversion, and in the lass generated bya convex core convex non-additive probabilities, ith a convex core). We are able to rove two versions of the law of arge numbers...

We present two alternative definitions of Nash equilibrium for two person games in the presence af uncertainty, in the sense of Knight. We use the formalization of uncertainty due to Schmeidler and Gilboa. We show that, with one of the definitions, prudent behaviour (maxmin) can be obtained as...