December 1995 <p>We explore signaling behavior in settings with a discriminating signal and several costly nondiscriminating ("money burning") activities. In settings where informed parties have many options for burning money, existing theory provides no basis for selecting one nondiscriminating...</p>

We explore signaling behavior in settings with a discriminating signal and several costly nondiscriminating ( money burning ) activities. In settings where informed parties have many options for burning money, existing theory provides no basis for selecting one nondiscriminating activity over...

In financial markets characterized by imperfect depth, speculative trading will have transitory effects on the market price as market makers must be compensated for the risk of holding the asset. The number of people providing liquidity to a market will generally be endogenously determined by...

The high variance of exchange rates can be partially explained by the fact that traders with transitory demands can have temporary effects on the market rates. In this paper we explore theoretically the effect on market prices of these non-informational traders when the number of market makers...

Mutual funds whose share prices are not calculated with enough precision face the danger of opportunistic trading. This fact is documented empirically with respect to the Government Securities Investment Fund (G Fund), a part of the defined contribution plan run by the US federal government for...

This paper explores whether speculative activity can,in practice,generate the ARCH- type behavior found in .nancial time series.Specifically,G7 equity marke indices are examined for evidence of a dynamic whereby speculative interest is self-sustaining, that is,markets can become 'hot'. A...

This paper considers implementation issues arising from potential reforms to the United States Social Security system. Many reform proposals involve individually invested accounts, but the corporate governance implications of such accounts have not been fully explored. Existing reform plans will...

This paper has two goals. First, we discuss several emerging approaches to applied welfare analysis under non-standard (“behavioral”) assumptions concerning consumer choice. This provides a foundation for Behavioral Public Economics. Second, we illustrate applications of these approaches by...

A norm of 50-50 division appears to have considerable force in a wide range of economic environments, both in the real world and in the laboratory. Even in settings where one party unilaterally determines the allocation of a prize (the dictator game), many subjects voluntarily cede exactly half...