A firm hiring new workers has a choice: it can either hire permanentquot; workers, which means entering into a quot;life-time employmentquot; (long term) contract with them, or quot;temporaryquot; ones, who can be hired and fired according to current needs. We assume that the latter are less...

Most models of trade in speculative markets make the assumption that agents interpret public information identically. We provide empirical evidence that this assumption is overly restrictive. We begin by investigating the relation between the volume of trade and stock returns (NYSE, AMEX and...

The paper analyzes the benefits of retaining flexibility in a firm s hiring practices by building on Pindyck s (1988) model of irreversible investment. Two types of workers (contracts) are allowed to co-exist: permanent workers, who cannot be fired, and temporary ones, who are hired and fired...