In many principal-agent relations, objective measures of the agents' performance are not available. In those cases, the principals have to rely on subjective performance measures for designing incentive schemes. Incentive schemes based on subjective performance measures open the possibilities...

We study the problem of obtaining accurately sized test statistics in finite samples for linear regression models where the error dependence is of unknown form. With an unknown dependence structure there is traditionally a trade-off between the maximum lag over which the correlation is estimated...

This paper examines the causal association between family background characteristics--parental education and family size-and returns to schooling using data from the Occupational Change in a Generation Survey. I first develop a formal model of schooling and earnings, with heterogeneous returns...

Gender differences in "competitiveness," previously documented in laboratory experiments, are hypothesized to play a role in a wide array of economic outcomes. The current paper provides evidence of competition-aversion in a natural setting somewhere between the simplicity of a laboratory...

This paper extends the theoretical framework for exploring the diffusion of new technologies through firms and industries. It is assumed that information about new and profitable technologies is not immediately available to all of the agents in the economy; this information spreads through the...

This paper considers a credit mechanism for selecting a unique competitive equilibrium (CE). It is shown that in general there exists a “price-normalizing†bundle, with which the enlargement of the general-equilibrium structure to allow for default subject to appropriate penalties...

We analyze a multistage stochastic asset allocation problem with decision rules. The uncertainty is modeled using economic scenarios with Gaussian and stable Paretian non-Gaussian innovations. The optimal allocations under these alternative hypothesis are compared. If the agent has very low or...

As support for traditional asset models of the foreign exchange market fades, there is growing interest in more general models that include flows from international trade and international investment. One advantage of flow models is that they fit naturally into the recent literature on...

Taking an evolutionary view of markets, Harold Demsetz hypothesized that firms differ persistently in efficiency and that industry concentration results from growth of efficient firms at the expense of inefficient ones. We test the hypothesis with high quality microdata from the US hospital...