I study an economy in which entrepreneurs seek financing for long-term projects from intermediaries, who specialise in monitoring, and uninformed investors. Monitoring enables an intermediary to affect investment decisions, and to learn the firms probability of success. Optimal financial...

Merchant guilds have been portrayed as “social networks“ that generated beneficial “social capital“ by sustaining shared norms, effectively transmitting information, and successfully undertaking collective action. This social capital, it is claimed, benefited society as a whole by...

Local merchant guilds were ubiquitous in medieval Europe, and their development was inextricably linked with the development of towns and the rise of the merchant class. We develop a theory of the emergence of local merchant guilds as an efficient mechanism to implement collusion among merchants...

Contractual execution generates hard information, available to the contracting parties, even when contracts are secretly executed. Building on this simple observation, the paper shows that incomplete contracts can be preferred to complete contracts. This is because (i) execution of incomplete...

A large body of theoretical literature suggests that capital structure plays an important as a managerial incentive mechanism. Cross-sectional empirical studies have identified a positive effect of leverage on expected performance (measured by Q) for firms with low growth opportunities. This is...

This paper examines how managers may be given appropriate incentives to (a) provide effort, and (b) implement efficient implicit contracts with workers. Under certain assumptions, this can be achieved by tying managerial compensation to shareholder value. However, if reputation effects are weak,...

This paper explores a new role for venture capitalists, as knowledge intermediaries. A venture capital investor can communicate valuable knowledge to an entrepreneur, facilitating innovation. The venture capitalist can also communicate the entrepreneur's innovative knowledge to other portfolio...

We study individual ability to memorize and recall information about friendship networks using a combination of experiments and survey-based data. In the experiment subjects are shown a network, in which their location is exogenously assigned, and they are then asked questions about the network...

Innovative start-ups and venture capitalists are highly clustered, benefiting from localized spillovers: Silicon Valley is perhaps the best example. There is also substantial geographical variation in venture capital contracts: California contracts are more 'incomplete'. This paper explores the...