In this paper, we model two drivers which underlie the economic trade-off shareholders face in designing incentives for optimal effort allocation by managers. The first driver is limited managerial attention, by which we mean that performing one task may have an adverse effect on the...

At the fundamental level, the key challenge to a theory of income measurement is to resolve the problem caused by soft information, which leads to incomplete preferences within the entity (i.e. some alternatives are not always unambiguously ranked). This paper presents a formal axiomatic...

In this paper, we investigate how the accounting measurement basis affects the capital market pricing of a firm's shares, which, in turn, affects the efficiency of the firm's investment decisions. We distinguish two broad bases for accounting measurements: input-based and output-based...

Fiber to the Premise (FTTP) exhibits characteristics of a natural monopoly industry. However, service level competition is possible in FTTP and can be achieved by a structural separation between network ownership and service provisioning (henceforth, referred to as a wholesale-retail split). A...

The Internet reduces the cost of exchanging information. Electronic markets exploit this opportunity to enable investors to place quotes at very little cost and compete with incumbent trading systems. Does this quasi–free entry situation lead to competitive liquidity supply? We analyze trades...

There are two important rules in a patent race: what an innovator must accomplish to receive the patent and the allocation of the benefits that flow from the innovation. Most patent races end before R&D is completed and the prize to the innovator is often less than the social benefit of the...

We study the impact of time-varying macroeconomic conditions on optimal dynamic capital structure and the aggregate dynamics of firms in a cross-section. Our structural-equilibrium framework embeds a contingent-claim corporate financing model within a standard consumption-based asset- pricing...

Using data from the 128 bit video game industry this paper evaluates the effect of vertical integration and the foreclosure of complementary software to rival hardware. Foreclosure occurs when a console hardware manufacturer produces software which is incompatible with rival hardware. Estimation...

Although researchers have documented instances of crowd wisdom, it is important to know whether some kinds of judgments may lead the crowd astray, whether crowds’ judgments improve with feedback over time, and whether crowds’ judgments can be improved by changing the way judgments are...

The fiscal theory of the price level (FTPL) has attracted much attention but disagreement remains concerning its defining characteristics. Some writers have emphasized implications regarding interest-rate pegging and determinacy of rational expectations solutions, whereas others have stressed...