We consider the problem of moral hazard in the team of managers employed in a firm when the principal/firm owner can play an active role in determining team output. Unless the principal's compensation is non-decreasing in firm value there is an additional moral hazard problem since the principal...

In 1982, Dimensional Fund Advisors launched a mutual fund intended to capture the returns of small-cap stocks comprising the 9th and 10th deciles of NYSE market capitalization. Although linked to the CRSP 9-10 Index, the design of the 9-10 Fund incorporates investment rules and a trading...

In many industries there are firms whose owners are also customers. They have contrasting interests: they get more utility as the firm's profits increase, and the prices of the good decreases as their private consumer surplus increases. An interesting example is the stock exchange industry. This...

Exchange seats are capital assets that confer access to the trading floor. On the New York Stock Exchange (NYSE), seta are bought and sold in a public auction market. As such, their prices reflect expectations about future activity and returns for the stock market as a whole. For this reason,...