Managing knowledge inventories is the central issue posed by the knowledge-based view of the firm. Because of future opportunities to switch among technologies and idle or deploy technologies over time, managing knowledge inventories requires valuing flexibility. Real option theory presents...

We study the emergence of norms of cooperation in experimental economies populated by strangers interacting indefinitely and lacking formal enforcement institutions. In all treatments the efficient outcome is sustainable as an equilibrium. We address the following questions: can these economies...

I extend the Dixit-Stiglitz (1977) model of monopolistic competition by relaxing the assumption of a single technology. The main objective is to study whether the equivalence of the monopolistically competitive equilibrium to the social optimum still holds in the extended model. I show that the...

We examine the determinants of the realized bid-ask spread in the U.S. corporate, municipal, and Treasury bond markets for the period 1995 to 1997, based on newly available transactions data. We find that the bid-ask spread is negatively related to a bond’s trading activity and positively...

Real options models have emerged as a compelling tool for understanding market entry decisions involving sunkness, or irreversibility. In contrast to neoclassical models of investment, real options models consider that uncertainty has a direct effect on the willingness to invest, and that the...

Using proprietary audit trail transactions compiled by the Commodity Futures Trading Commission, we investigate, at the individual trader level, (1) the timing and (2) the determinants of dual traders’ personal trades. Our analysis reveals a surprising absence of any trade timing by dual...

In this study we offer a new approach to proving the differentiability of the value function, which complements and extends the literature on dynamic programming. This result is then applied to the analysis of equilibrium in the recent class of monetary economies developed in [13]. For this type...

We empirically examine earnout contracts, which provide for contingent payments in acquisition agreements. Our analysis reveals considerable heterogeneity in the terms of earnout contracts, i.e. the potential size of the earnout, the performance measure on which the contingent payment is based,...

In this paper we replicate and extend the experiment of Fehr and Gaechter (2000) that analyzes the effect of an opportunity to punish others on the level contributions in the Voluntary Contributions Mechanism.