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Taking into account that it is in the nature of the modern corporat ion that risks are distributed over several agents, we discuss in this paper the organisational behaviour as it results from such dispersal of responsibilities for both the principal and the agent. We explore the hypothesis that...
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how the agent’s risk attitude affects his decisions. This “Threshold Theory” framework is based on a real options approach … influence the agent’s risk attitude. The theory’s predictions help to explain many anomalies that the standard expected utility … model cannot. Threshold Theory can also model behavior in contexts such as individual investor decisions, corporate …
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This paper describes a business cycle model where financial contracting with interrelated covenants is the mechanism by which bondholders and stockholders confront the risks associated with future production-investment decisions and financing decisions of the firm and in the process resolves a...
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Double marginalization is a common inefficiency in vertical markets. One theory of the source of double marginalization …
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