Consider a firm owned by shareholders with heterogeneous beliefs and run by a manager. Shareholders can trade contingent claims in a complete asset market. The manager is given a contract so that at equilibrium she chooses the plan preferred by shareholders. We show that the contract should...

In an experiment on investors' financial decisions, we find variations in information can induce distinct signals-beliefs-decisions chains within agents. Subjects observe the time series of a risky index and of an additional signal, which helps predict returnsin some randomly chosen rounds, and...

I consider multi-round cheap talk communication environments in which, after a lie, the informed party has no memory of the content of the lie. I characterize the equilibria with forgetful liars in such settings assuming that a liar's expectation about his past lie coincides with the equilibrium...