This paper studies under what circumstances an incumbent has an incentive to over-invest in a "commitment variable" such as advertising or R&D expenditures. It is sometimes argued that the answer crucially depends on the question, wether the "second stage variables" are strategic complements or...

The proposed new law for the Swiss National Bank attempts to establish the SNB as an entity, which is practically uncontrolled by the democratic institutions of our country. The proposal has to be fundamentally remodelled, taking into account the following principles: The more independence the...

This paper analyzes the optimal interest rate policy in currency crises. Firms are credit constrained and have debt in domestic and foreign currency, a situation that may easily lead to a currency crisis. An interest rate increase has an ambiguous effect on firms since it both makes more...

The so-called second Bergier report offers a wealth of information as well as some useful and valuable analytical insights, but it also suffers from a number of shortcomings and weaknesses, some of which are quite serious. The significance of important facts is not worked out properly. The...

Legislation affects corporate governance and the return to human and financial capital. We allow the preference of a political majority to determine both the governance structure and the extent of labor rents. In a society where median voters have relatively more at stake in the form of human...

We discuss the extent to which the expectation of a rare event, not present in the usual postwar sample data, but not rationally excludable from the set of possibilities - the peso problem -, can effect the equilibrium behavior of rational agents and the characteristics of market equilibrium. To...

Si la Suisse a depuis deux ans un droit de la concurrence largement modernisé et compatible avec celui d'autres juridictions telles que la Communauté, la mise en oeuvre de cette nouvelle politique doit être encore améliorée. En effet, la qualité des décisions laisse sérieusement à...

Some environmental policies, like tax credit, have tried to induce the acquisition of energy efficient units and the replacement of old energy inefficient vintages. However, they have faced the energy paradox that is a slow diffusion of new vintages. We develop a stochastic model of irreversible...

We develop and analyze a structural model of effciency wages founded on reciprocity. Workers are assumed to face an explicit trade-off between the disutility of providing effort and the psychological benefit of reciprocating the gift of a wage offer above some reference level. The model provides...