According to prospect theory (Kahneman & Tversky, 1979), gains and losses are measured from current wealth, which serves as a reference point. We attempted to ascertain to what extent the reference point shifts following gains or losses. In questionnaire studies we asked subjects what stock...

This paper examines some policy issues related to the interaction between internal and external corporate control mechanisms-board dismissals and takeovers-by focusing on the information aggregation and other effects related to this interaction. We model the functioning of corporate control...

An unresolved issue in empirical research on corporate control is the extent to which takeovers improve target and bidder firm value. We provide estimates of value improvements that avoid the bidder-revelation bias present in previous studies. Our approach, the intervention method, is based on a...

The model examines the underlying spot market determinants of hedging and risk premia. The analysis takes into account spot market clearing, quantity and price variability, stock market portfolio opportunities, diverse output distributions of producers, demand and supply shocks, and supply...

An informational cascade occurs when it is optimal for an individual, having observed the actions of those ahead of him, to hollow the behavior of the preceding person without regard to his own information. Among the phenomena that can be explained by informational cascades are conformism at...

We offer a model in which sequences of individuals often converge upon poor decisions and are prone to fads, despite communication of the payoff outcomes from past choices. This reflects both direct and indirect action-based information externalities. In contrast with previous cascades...