We consider a labor market search model where, by working londer hours, individuals acquire greater skills and thereby obtain better jobs. We show that job inequality, which leads to within-skill wage differences, gives incentives to work longer hours. By contrast, a higher probability of losing...

This paper presents a new non-cooperative approach to multilateral bargaining. We consider a demand game with the following additional ingredients: (i) There is an exogenous deadline, by which bargaining has to end; (ii) Prior to the deadline, players may sequentially change their demands as...

This paper examines the experience of fourteen developed countries for which there are about thirty years of quarterly inflation-adjusted housing price data. Price dynamics is modelled as a combination of a country-specific component and a cyclical component is a two-state variable captures...

European competition laws condemn as “exploitative abuses” the pricing policies of dominant firms that may result in a direct loss of consumer welfare. Article 82(a) of the EC Treaty, for example, expressly states that imposing “unfair” prices on consumers by dominant suppliers...

We study the classic implementation problem under the behavioral assumption that agents myopically adjust their actions in the direction of better-responses within a given institution. We offer results both under complete and incomplete information. First, we show that a necessary condition for...

This paper applies the real options methodology to estimate the impact of the restructuring measures in the taxi sector in Barcelona in 1995. These measures included among other things the establishment of a fixed price for the license as a way to reduce the uncertainty on the future performance...

Much of the growing literature on tactical and strategic asset allocation uses vector autoregressive models (VAR) for returns and predictors. Since the portfolio advice they generate may be misleading if those models are not an accurate description of reality, we evaluate the implied joint...

This paper analyzes the effects on ex ante risk-shifting incentives and ex post fiscal costs of three policies that are frequently used in dealing with banking crises, namely, forbearance from prudential regulations, extension of blanket deposit guarantees, and provision of unrestricted...

Firms that are more highly levered are forced to raise capital more often, a process that leads to the generation of information. Of course transparency can improve the allocation of capital. However, when the information about the firm affects the terms under which the firm transacts with its...

Theory provides many explanations about the influence of electoral rules on politicians’ equilibrium behavior. With a few exceptions, all models agree that majoritarian elections are associated with more targeted redistribution and lower politicians’ rents than proportional representation....