This paper examines the empirical relationship between technological innovations, market share and stock market value. New developments in the estimation of dynamic count data models are used to control for unobserved firm specific heterogeneity. We find a robust and positive effect of market...

We construct a theory of persistent civil conflicts, where persistence is driven by the endogenous dynamics of inter-ethnic trust and trade. In times of peace, agents belonging to two groups are randomly matched to trade bilaterally. Trade hinges on trust and cooperation. The onset of conflict...

The authors analyze incomplete long-term financial contracts between an entrepreneur with no initial wealth and a wealthy investor. Both agents have potentially conflicting objectives, the entrepreneur cares about both pecuniary and nonpecuniary returns from the project while the investor is...

This analysis uncovers and compares two competing effects of growth on unemployment. The first is a capitalization effect, whereby an increase in growth raises the capitalized returns from creating jobs and consequently reduces the equilibrium rate of unemployment. The second is a creative...

We study the evolution of a social norm of “cooperation” in a dynamic environment. Each agent lives for two periods and interacts with agents from the previous and next generations via a coordination game. Social norms emerge as patterns of behaviour that are stable in part due to agents'...

We study the formation of a ruling coalition in non-democratic societies where institutions do not enable political commitments. Each individual is endowed with a level of political power. The ruling coalition consists of a subset of the individuals in the society and decides the distribution of...

This paper shows that in a frictional labor market part of the productivity gains from general training will be captured by future employers. As a result, investments in general skills will be suboptimally low, and contrary to the standard theory, part of the costs may be borne by the employers....