This paper analyzes the stochastic simulation of econometric models using three different methods for specifying the probability distribution of the structural error terms. The impact of these different assumptions on the simulation bias and model variance is explored empirically. Monte Carlo...

This article investigates interclub sharing arrangements as a means for coping with random utilization without imposing capacity constraints that require members to be turned away. The optimal sharing rule and toll are identified for a two-club sharing scheme. When optimal sharing is invoked,...

In many bargaining environments there are random delays in the transmission of proposals. Two computerized bargaining experiments are designed to study behavior with this condition. A clock starts counting down from three minutes when the first offer is sent. In one experiment the clock is not...

The authors consider an imperfect test of product quality and ask how it interacts with adverse selection to affect market size. Although one might expect adverse selection to be mitigated, there are scenarios where it is exacerbated. Also, two counterintuitive comparative static results emerge....

This paper examines sequential exercise strategies by warrant holders and the gain from hoarding w arrants. Several obstacles to acquiring large blocks to exploit seque ntial strategies are analyzed. First, several reinvestment policies a re identified for which sequential exercise is not...

The authors show that for certain capital structures equity has an incentive to buy out another claim and alter the firm's investment strategy so as to maximize the combined value of equity and the acquired claim. This restructuring may reintroduce agency problems into capital structures which...

We estimate the ex-ante reward per unit of spot-rate volatility (the reward-to-risk ratio) for U.S. Treasury bills on a monthly basis and find that these ratios vary predictably over time. Reward-to-risk ratios are positively autocorrelated; month-to-month changes in these ratios are negatively...