The manager of a firm that is selling an illiquid asset has discretion as to the sale price: if he chooses a high (low) selling price, early sale is unlikely (likely). If the manager has the option to default on the debt that is collaterized by the illiquid asset, the optimal selling price...

Why are the prices of stocks and other assets so volatile? Efficient capital markets theory implies that stock prices should be much less volatile than actually observed, reflecting an unrealistic assumption that investors are risk neutral. If instead investors are assumed to be risk averse,...

A model is proposed in which equilibrium nominal prices are determined in a setting in which both money and physical commodities are fully divisible.The strategy space for each agent consists of declining the transaction or implementing the Nash bargaining solution.The equilibrium level of...