Surrounding the passage of Dodd-Frank, a noted author argues that existing market manipulation statutes cannot effectively prosecute manipulation cases because the statutes prohibit fraud, not market power. This is incorrect. While traditional economic theory can explain the incentives...

In this paper, we present a straightforward economic model that explains the incentives to manipulate nodal energy prices in a “Day 2” RTO market. The model distinguishes between legitimate market participation that increases overall market efficiency and manipulative behavior that distorts...

This paper analyses lawyer's choices of law in international sales contracts. It identifies key reasons for opting in or out of the CISG across different jurisdictions. The paper then examines aspects of this choice from economic and psychological perspectives: from the ability to externalize...

How do voters respond to heightened risk? Dominant theories expect accountability issues to surface or distributional conflict to intensify once threats become salient. Unsatisfactorily, these accounts rely on compound treatment effects of exposure not only to risk but also to direct losses or...

Biased perceptions of risks change the perceived value of insurance and the perceived returns to avoiding these risks. I show empirically that unemployed workers overestimate how quickly they will find work, but underestimate the return to their search efforts. I analyze the consequences for the...

Evidence shows that (i) people overweight low probabilities and underweight high probabilities, but (ii) ignore events of extremely low probability and treat extremely high probability events as certain. Decision models, such as rank dependent utility (RDU) and cumulative prospect theory (CP),...

Money managers are rewarded for increasing the value of assets under management. This gives a manager an implicit incentive to exploit the well-documented positive fund-flows to relative-performance relationship by manipulating her risk exposure. The misaligned incentives create potentially...

Money managers are rewarded for increasing the value of assets under management, and predominantly so in the mutual fund industry. This gives the manager an implicit incentive to exploit the well-documented positive fund-flows to relative-performance relationship by manipulating her risk...