This paper studies the welfare economics of informed trading in a stock market. We model the effect of more informative prices on investment, given that this dependence will itself be reflected in equilibrium prices. We show that in rational expectations equilibrium with price-taking competitive...

The authors provide an epistemic analysis of forward induction in games with complete and incomplete information. They suggest that forward induction may be usefully interpreted as a set of assumptions governing the players' belief revision processes, and define a notion of strong belief to...

The authors argue that the rationalizability approach is particularly appropriate to analyze games with genuine incomplete information.

This paper develops a framework to test alternative market microstructure models of the bid-ask spread. If, on the one hand, information-based models result in bid and ask quotes that are non-Markovian, and the other hand, the Markov property may hold in equilibrium settings where the market...

How much does one need to know about the characteristics of heterogeneous agents in order to position them correctly in an organizational structure? This question is addressed in a project selection framework with error--prone decision--makers.

This paper, instead of focusing on agency cost, analyzes the role of risk-sharing under problems of enforceability (default) to explain the optimal determination of capital structure. Optimal contract structure presents equity and debt.

This paper analyses a signalling model of managers' promotion from divisions to the CEO position, in both cases of a monopoly and a duopoly. Explicit and implicit incentives in the presence of asymmetric information are shown to induce managers to increase effort in order to signal high ability...

We consider a homogenous good oligopoly with identical consumers who learn about prices either by (sequentially) visiting firms or by consulting a price agency who sells information about which firm charges the lowest price.

A number of economists have supported the taxation of speculation in financial markets. We examine the welfare economics of such a tax in a model of trading in a financial market where some agents have superiror information. We show that in some cases a tax on speculators may actually increase...

In this paper the relevance of public and symmetric information on the enforceability of contracts will be analyze. In particular, it will examine an historical contract, the sea loan, which was used to finance long-distance maritime commerce from the times of ancient Greece to those of Medieval...