Working Papers

This chapter integrates research in several academic disciplines on the lay theories that people rely on when making sense of their social environments. First, drawing on philosophy of science, we establish several criteria for a theory and…

We analyze single parameter process design problems that typically entail minimizing the sum of convex and concave functions. We transform such problems into a tractable form, and obtain sharp characterizations of the original problem. Solution…

In this paper we examine the determinants of a firm’s level of voluntary disclosure. As a comprehensive measure of a firm’s disclosure level, we use analysts’ evaluations of firms’ disclosures as reported in the Financial Analysts Federation…

This paper explains a puzzle created by the S&P 500 cash and futures prices during the crash of October 1987. The cash index appears to be a moving average of the futures, but nontrading in constituent stocks explains only the initial period…

Firms often concentrate on a narrow range of activities and claim to forego other, apparently profitable, opportunities. This pursuit of narrow strategies is applauded by some academics who study strategic management. We present two related…

In this paper we prove that any strategy in any evolutionary game may result in four different types of evolutionary stability. We formulate and prove necessary and sufficient conditions for all four types of stability. We argue that only two of…

We develop an ordinal approach to comparing the equilibria of economic models. The main advantages of this approach, compared to the traditional approach based on signing derivatives, are that (1) it utilizes only a subset of the assumptions…

This paper develops a signaling theory of competitive political action. Despite the free rider problem associated with mass political participation, rational and self-interested individuals may take costly political action to inform or manipulate…

The Condorcet Jury Theorem has classically presumed a static context: the decision making group faces a fixed set of alternatives, compares the options in a pairwise fashion, and the process ends when the group makes a final choice. This is a…

In this paper we conduct an empirical investigation of the recent explanations offered for the nature of a franchising contract. In particular, we focus on the arguments posited by Lal (1990) where it is suggested that since both the franchisor’…

This paper develops a model in which debt serves to constrain inefficient investments of empire building managers due to the consequent control implications of bankruptcy. Unlike related free cash flow models, capital structure is voluntarily…

Organizational theorists have long recognized the important role cooperation plays in organizations. However, current theories say little about the antecedents of cooperative behavior in organizations. In this chapter, I present a conceptual…

This paper demonstrates that in a simple setting with managerial concern for reputation and asymmetric information on ability, most managers may refrain from undertaking innovations which stochastically dominate an industry standard. Common…

In this paper we examine the determinants of firms’ level of voluntary disclosure. We use analysts’ published evaluations of firms’ disclosures as a comprehensive measure of disclosure level and use a model of discretionary disclosure to explain…

It has been argued that U.S. regulatory agencies take an extreme and often inconsistent approach to the regulation of risk: they tend to overreact to dramatic, well-publicized accidents and disasters. The standard explanation invokes the…

We develop a distributive politics theory of delegation and accommodation in U.S. trade policy. Congress may choose to delegate trade policymaking authority to the president in order to implement more efficient and less protectionist trade policy…

This paper considers the optimal exercise policy for employee stock options taking into account the tax incidence of exercise on both the employee and employer as well as the employee’s risk preferences. A recursive algorithm that determines the…

The comparative study of the evolution of Intel Corporation’s strategic position in two semiconductor memory businesses and in the microprocessor business provides insight in the forces that drive the strategic business exit process in dynamic…

In the context of Merton’s original problem of optimal consumption and portfolio choice in continuous time, this paper treats an extension in which the investor is endowed with a stochastic income that cannot be replicated by trading the…

This paper documents the available evidence on international portfolio investment in five OECD countries. We draw three conclusions from the data. First, there is strong evidence of a home bias in national investment portfolios despite the…