This paper analyzes the case of a principal who wants to provide an agent with proper incentives to explore a hypothesis that can be either true or false. The agent can shirk, thus never proving the hypothesis, or he can avail himself of a known technology to produce fake successes. This latter...

We study firms' incentives to acquire costly information in booms and recessions to understand the role of endogenous information in explaining asymmetric business cycles. When the economy has been in a boom in the previous period, and firms enter the current period with an optimistic belief,...

A player of privately known strength chooses when to enter a market, and an incumbent chooses whether to compete or concede. Information about the potential entrant's type is revealed publicly according to an exogenous news process and the timing of entry. I analyze stationary equilibria using...

We develop a framework in which: (i) a firm can have a new product tested publicly before launch; and (ii) tests vary in toughness, holding expertise fixed. Price flexibility boosts the positive impact on consumer beliefs of passing a tough test and mitigates the negative impact of failing a...

We study how asymmetric information impinge on oligopolistic firms’ decision between direct investment and exports in a game-theoretic model with Bayesian learning. Host firms have superior information about market demand and foreign firms can improve their knowledge if foreign direct...

A principal who knows her type can face public testing to help attract endorsements from agents. Tests are pass/fail and have an innate toughness (bias) corresponding to a trade-off between the higher probability of passing a softer test and the greater impact on agents’ beliefs from passing a...

The paper examines incumbents’ incentives to share information in the presence of entry threat when incumbents face uncertainty about their cost functions. Similar to the experimentation and learning literature, firms in this model can learn more about their costs through output production...

We develop a framework in which: (i) a firm can have a new product tested publicly before launch; and (ii) tests vary in toughness, holding expertise fixed.  Price flexibility boosts the strong positive impact on consumer beliefs of passing a tough test and mitigates the strong negative impact...

This work presents a theoretical and empirical evaluation of the role of market belief in the structure of risk premia. Our main result is that fluctuations in market belief are large contributors to the time variability of risk premia. On average, the risk premium on holding Federal Funds...

This paper analyzes the case of a principal who wants to provide an agent with proper incentives to explore a hypothesis that can be either true or false. The agent can shirk, thus never proving the hypothesis, or he can avail himself of a known technology to produce fake successes. This latter...