Working Papers

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…

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 serious 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…

This paper addresses the question of what one can learn from observing cross-sectional and time series variations in the volatility of prices in an arbitrage-free securities market. We introduce the notions of stochastic derivatives, marginal…

An analysis of the information model is presented to challenge the assertions that the information model and the notion of correlated equilibrium are consequences of the subjectivist, Bayesian view of uncertainty.

The purpose of this paper is to analyze the observed similarity of agents’ decisions. In what follows we will distinguish between clustering, which is the observation that agents’ decisions tend to be very similar, and herding, which is the…

We provide new evidence regarding the degree of integration between the markets for stocks, future and options prior to and during the October 1987 market crash. Where previous analyses have resulted in recommendations for the implementation of…

Concurrent engineering can reduce the time required to develop new products. In contrast to the conventional approach, in which the product design is (nearly) completed before it is “thrown over the wall” to process design group, concurrent…

Recent research on organizational impression management has emphasized that leaders are held responsible not only for managing an organization’s actions, they are also expected to explain and make sense of those actions. When events occur that…

Since the publication of The American Voter (Campbell et al. 1960), most analyses of electoral behavior have focused upon three factors: party identification, issues and candidate attributes. According to the Michigan model, voters have long-…