I investigate the impact of environmental volatility and the cost of information on the preferred organizational structure, as determined by the allocation of decision rights, the compensation structure of the managers and the degree of operational integration (such as the use of shared...

Recent empirical studies suggest that the negative effects of uncertainty shocks are stronger in recessions than during booms. In this study, I provide a theoretical mechanism that can explain this empirical observation. I start from the argument that the effect of uncertainty on investment...

This paper proposes a direct and robust method to quantify economic uncertainty. Cap and floor options are empirically used to gauge uncertainty about future interest rates. The developed measure is shown to be counter-cyclical, precedes bad macroeconomic states, and its increases are associated...

We study the implications of overconfidence for price setting in a monopolistic competition setup with incomplete information. Our price-setters overestimate their abilities to infer aggregate shocks from private signals. The fraction of uninformed firms is endogenous; firms can obtain...

Uncertainty appears to have both a short-run and a long-run component, which we measure using firm and macro implied volatility data from equity options of 30 days to 5 years duration. We ask what may be driving uncertainty over these different time horizons, finding that policy uncertainty,...

This paper studies a dispersed information economy in which agents can exert costly attention to learn about an unknown aggregate state of the economy. Under certain conditions, attention and four measures of uncertainty are countercyclical: Agents pay more attention when they expect the economy...

As a consequence of recent market conditions an increasing number of investors are realizing the importance of controlling tail risk to reduce drawdowns thus increasing possibilities of achieving long-term objectives. Recently, so called volatility control strategies and volatility target...