Transparency regulation aims at reducing financial fragility by strengthening market discipline. There are however two elementary properties of banking that may render such regulation detrimental. First, an extensive financial safety net may eliminate the disciplinary effect of transparency...

Convention wisdom usually suggests that agents should use all the data they have to make the best possible prediction. In this paper it is shown that agents may sometimes be able to make better predictions by throwing away data. The optimality criterion agents adopt is the mean squared criterion.

We build a model where the occupational choice of programmers determines the quality of programs in the consumer market. A monopolist, supplying the consumer market, has to take into account the impact the free software has on the market. When software implementation costs are low the monopolist...

This paper develops a theory of non-monetary collusion, where agents exchange favours. We examine the optimal use of information in a simple hierarchy. It is shown that when only the supervisor's information about agent is used, collusion does not arise, since favours cannot be exchanged.