We study dynamic incentive contracts in a continuous-time agency model with productivity switching between two unobserved states, about which an investor may learn by deviating from the myopically optimal action. The optimal contract balances short-run profits from myopic actions and the...

We study dynamic incentive contracts in a continuous-time agency model with productivity switching between two unobserved states, about which an investor may learn by deviating from the myopically optimal action. The optimal contract balances short-run profits from myopic actions and the...

We examine a dynamic experimentation problem in which managers make a binary choice that influences the information available to investors. We model a manager's multi-period problem of discretionary disclosures of the persistent component of earnings, when disclosure of current earnings is...

The 1988 Basel Accord defined what constituted bank capital, and put in place minimum capital adequacy ratios for each type of capital as well as for total bank capital. Regulators as well as market participants, however, have come to rely on Tier 1 capital or equity capital as the main...

This paper provides an explicit solution to a limited participation model with power utility. With power utility, current consumption growth is shown to depend on last period's consumption growth rate. An unanticipated monetary expansion affects consumption growth via an inflation tax on...