The Mellon Institute's Energy Productivity Center (EPC) has recently completed a study asking the question, "How would the nation have provided energy services in 1978 if its capital stock had een reconfigured to be optimal for actual 1978 energy prices?" Interest in this question is motivated...

Many economists argue that the primary economic function of banks is to provide cheap credit, and to facilitate this function, they advocate the strict protection of creditor rights. But banks can serve another important economic function: by screening projects they can reduce the number of...

Commercial banks frequently encounter optimistic entrepreneurs whose perceptions are biased by wishful thinking. Bankers are left with a difficult screening problem: separating realistic entrepreneurs from optimists who may be clever, knowledgeable, and completely sincere. We build a...