Working Papers

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 aper 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…

This paper investigates how a designer of an organization (referred to as the regulator) should organize a production activity in which two different units produce components and where each unit has private information about its cost. Three…

This paper shows that the extent of information available in the market about a security can crucially affect its liquidity. Following Kiyotaki and Wright (1989), exchange is modeled as a sequential random matching game. Agents who want to…

This study examines the effects of institutional constraints — political boundaries and regulatory policies — on the organizational evolution of the early American telephone industry. State-level panel data on independent telephone companies…

Abstract not available.

This paper examines financial market equilibrium in the presence of a large investor, such as a pension fund, who has access to a costly monitoring technology allowing him to affect securities’ expected payoffs. Despite the free-rider problem…

In July, 1992 Release, the Securities and Exchange Commission [SEC] announced that the Division of Market Regulation was undertaking a “study of the structure of the U.S. equity markets and the regulatory environment in which those markets…

Stock market crashes are rare, highly visible, and difficult to explain — a combination that evokes serioud debate about the underlying causes of stock price movements. Keynes’ dismissal of liquid stock markets as promoting ‘a game of Snap, of…

The hypothesis that the forward rate is an unbiased predictor of the future spot rate has been consistently rejected in recent empirical studies. This paper examines several sources of measurement error and misspecification that might induce…