Based on an experimental analysis of a simple monetary economy we argue that a monetary system is more stable than one would expect from individual rationality. Weshow that positive reciprocity stabilizes the monetary system, provided everyparticipant considers accepting money as a reasonable...

This paper contributes to the micro-foundation of money in centralizedmarkets with idiosyncratic uncertainty. It shows existence of stationarymonetary equilibria and ensures that there is an optimum quantity ofmoney. The rational solution of our model is compared with actual be-havior in a...

For decades economists have considered money illusion aslargely irrelevant. Here we show, however, that money illusion haspowerful effects on equilibrium selection. If we represent payoffs innominal terms almost all subjects play at or close to an inefficientequilibrium whereas if we lift the...

When information is costly, a seller may wish to prevent prospective buyers from acquiring information, for the cost of information acquisition is ultimately borne by the seller. A seller can achieve the desired prevention of information acquisition through posted-price selling, by offering...

We provide a direct estimate of the magnitude of agency costs in U.S. publicly-held firms. Using a sample of 1,307 firms in 1992-1997, we compute an explicit performance benchmark that compares a firm’s actual Tobin’s Q to the Q∗ of a hypothetical fully-efficient firm having the same...

The paper develope a models for evaluating the optimal hedging and trading strategies under default risk mitigation policies. It deals with an exchange traded derivative Instrument, i.e. future contracts but ures can succeed in locking the asset value, but they may create two additional risks...

Recent empirical work shows that a better legal environment leads to lowerexpected rates of return in an international cross-section of countries. Thispaper investigates whether differences in firm-specific corporate governancealso help to explain expected returns in a cross-section of firms...

We examine the underpricing and long-term performance of a broad set ofSwiss IPOs from 1983 to 2000. The average market adjusted initial return is34.97%. Our results support the ex ante uncertainty hypothesis, the signal-ling hypothesis and, to some extent, the market cyclicality hypothesis...

Die aktuelle Corporate Governance Literatur stützt die verbreitete Hypothe-se, dass sicht „gute“ Corporate Governance durch eine höhere Unterneh-mensbewertung manifestiert. Die Mehrzahl der empirischen Studien unter-sucht jedoch nur ausgewählte Corporate Governance Mechanismen...

Using a comprehensive set of listed Swiss companies, our findings suggestthat the size of the board of directors is an independent control mechanism.However, in contrast to previous studies, we do not find a significant rela-tionship between board size and firm performance. This suggests that...