Organizations face a competitive certification market for their statements, the statements do not convince third parties unless certified, the organizations are sometimes better served by a lie, and honest mistakes are possible. In our model of such a market: if certifiers are liable for...

Patient preferences have a social welfare interpretation consonant with a belief that the society affected by present decisions will last for a very long time. In stochastic settings, these preferences lead to justifications for variants of the precautionary principle.

Abstract. In many economic, political and social situations, circumstances change at random points in time, reacting is costly, and reactions appropri- ate to present circumstances may become inappropriate upon future changes, requiring further costly reaction. Waiting is informative if arrival...

In the first chapter, I analyze the US banking industry in order to explain two facts. First, larger banks have lower but less volatile returns on loans compared to smaller banks over the years. Second, larger borrowers have better financial records, i.e. verifiable "hard" information, and they...

This dissertation consists of three essays that apply both economic theory and econometric methods to understand design and dynamics of institutions. In particular, it studies how institutions aggregate information and deal with uncertainty and attempts to derive implications for optimal...

We develop a counterterrorism model to analyze the effects of allowing a government agency to torture suspects when evidence of terrorist involvement is strong. We find that legalizing torture in strong-evidence cases has offsetting effects on agency incentives to counter terrorism by means...

A choice problem is risky (respectively ambiguous) if the decision maker is choosing between probability distributions (respectively sets of probability distributions) over utility relevant consequences. We provide an axiomatic foundation for and a representation of continuous linear preferences...

A multiple-prior decision maker is open-minded if she can describe, as subjective uncertainty, all convex sets of distributions over payoff relevant consequences. Theorem 1: open-mindedness is equivalent to the ability to subjectively describe both the uniform distribution on an interval and the...