We examine the effects of speculation using credit derivatives on the cost of debt and the likelihood of default. The availability of credit default swaps induces investors who are optimistic about borrower revenues to sell protection instead of buying bonds. This benefits borrowers if...

This paper studies sequential information acquisition by an ambiguity-averse decision maker (DM), who decides how long to collect information before taking an irreversible action. The agent optimizes against the worst-case belief and updates prior by prior. We show that the consideration of...

We develop a signaling model of prestige seeking in competitive college applications. A prestigious program attracts high-ability applicants, making its admissions more selective, which in turn further increases its prestige, and so on. This amplifying effect results in a program with negligible...

We study decentralized colleges admissions in the face of uncertain student preferences. Enrollment uncertainty causes colleges to strategically target their admissions, forgoing students sought after by others and seeking students overlooked by others. When students' types are multidimensional,...

We study alternative breach remedies in the presence of specific investments that generate a direct benefit to the investor's trading partner (referred to as "cooperative investments"). We find that (i) expectation damages perform very poorly, inducing no cooperative investment; (ii) privately...