A computer-controlled portfolio selection task with three risky assets and either with or without a riskless asset was devised to test experimentally assumptions underlying the separation theorem and the capital asset pricing model. Two differently paid groups of subjects completed individually...

We compare alternative solutions to underinvestment (UI) problems in firms subject to limited access to equity markets, interest ceilings, and constraints on the volume of debt. Collaterals (assets or compensating balances) and credit insurance ('regular' or 'outcome' insurance whereby the...