The paper investigates stochastic private investment prior to trade. We study the incentives of a seller of an asset who can undertake risky investments to change its quality, which is not observable by potential buyers. We find that, even when investing is not efficient, the seller undertakes...

This work takes a closer look on the predominant assumption in usual lemon market models of having finitely many or even only two different levels of quality. We model a situation which is close to the classical monopolistic setting but admits an interval of possible quality values....

I analyze a monopolistic model of quality uncertainty but with the possibility of information acquisition on the consumer side. Information is costly and its amount is chosen by the consumer. The analysis of Bayesian equilibria shows the possibility of three equilibrium classes, only one of...

We analyze a rating agency's incentives to distort ratings in a model with a monopolistic profit maximizing rating agency, a continuum of heterogeneous firms, and a competitive market of risk-neutral investors. Firms sell bonds, the value of a firm's bond is known to the firm and observable by...

In this paper we consider the problem of efficiently allocating a given resource or object repeatedly over time. The agents, who may temporarily receive access to the resource, learn more about its value through its use. When the agents' beliefs about their valuations at any given time are...

The article shows that heterogeneous incomplete private information can explain the limited existence of guaranteed renewable health insurance (GR) contracts in an otherwise frictionless markets. We derive a unique equilibrium that can be of the form that either only a portion of the population...

ResumenSe ha considerado el comportamiento del sector eléctrico como un factor de gran trascendencia en desenvolvimiento de la economía de un país. Sin embargo, es notable el desconocimiento de algunas personas no especialistas es esta temática, de los conceptos básicos y de la...

This paper analyses the implications of bank market power and funding structure for risk and return. It employs a sample of 978 banks in 55 countries leading up to the 2008 financial crisis to test for two related hypotheses. First, competition reduces internal capital as the level of market...

This paper analyzes the efficiency of three simple cost-based pricing heuristics in a two-period capacity planning model with uncertain demand. All policies start with full cost introductory prices but differ in second-period pricing. Under "adaptive full-cost pricing", the firm updates...

This paper lays down the rudiments of a descriptive theory of competition among the digital tech platforms known as “FANGs” (Facebook, Amazon, Netflix and Google), amidst rising academic and policy polarization over the answer to what seems to be – at least at the formulation level – a...