Does the network structure in which economic agents interact affect their ability to coordinate of high payoff investments in environments with multiple equilibria? We conduct experiments with paid human subjects in an effort to resolve this important question. Our experiment tests whether two...

In this paper we develop a general equilibrium model in which firms finance investment by signing long-term contracts with a financial intermediary. Due to enforceability problems, financial contracts are constrained optimal, that is, they maximize the surplus of the contract subject to...