Using detailed transactions-level data on interbank loans, we examine the efficiency of an overnight interbank lending market, and the bargaining power of its participants. Our analysis relies on the equilibrium concept of the core, which imposes a set of no-arbitrage conditions on trades in the...

This study empirically examines the association between a firm’s cost structure and the discretionary investment (i.e., underinvestment or overinvestment) it makes in the short run. Consistent with higher fixed costs making managers more conservative in their investment behavior, we find that...

We study dynamic task allocation when providers' expertise evolves endogenously through training. We characterize optimal assignment protocols and compare them to discretionary procedures, where it is the clients who select their service providers. Our results indicate that welfare gains from...

We study a search model of investors' asset trading, intermediated by financial institutions that are at risk of selling under pressure. The pressure can lead to the development of a secondary market, where intermediaries bail each other out. Counterintuitively, an increase in competing...