We study strategic trading with a market maker who does not know the joint distribution of public information and an asset's value, and hence cannot interpret information properly. Following a public event, a probabilistic-ally informed trader who knows the distribution and liquidity traders...

We study a decision maker’s learning behavior when she receives recommendations from a black box (a recommender that the decision maker does not understand how it generates recommendations). We introduce four reasonable axioms and show that they cannot be satisfied simultaneously. We analyze...

Firms offer a variety of products to meet different customer needs. In many horizontally differentiated markets, prices are stable and firms make infrequent adjustment to their product lines. While prior research focuses on product line design, we investigate how firms should allocate their...

We provide an axiomatic foundation for a class of neural-network models applied to decision-making under risk, called neural-network expected utility (NEU) models. Motivated by classic experimental findings, we weaken the independence axiom in a novel way. We show how to use simple neurons,...

We extend Harsanyi's (1955) utilitarianism theorem to an infinite-horizon multi-generation setting: Under some additional assumptions, the Pareto condition is equivalent to utilitarian aggregation and the utilitarian weights are unique. Our results facilitate analysis of the properties of...

The stakeholder theory of capital structure proposed by Titman (1984) argues that firms will take into account the nonfinancial stakeholders' preferences when making capital structure decisions. In particular, firms selling specialized products will choose a lower leverage ratio. We propose a...