Severe economic downturns, characterized by deleverage, are typically preceeded by phenomena of debt overhang. This evidence suggests that large recessions may not be the result of large shocks, but, rather, of the interaction between typical shocks and the current state of the economy. We study...

Exploiting the timing of the 2005-2006 Italian bankruptcy law reforms, we disentangle the effects of reorganization and liquidation in bankruptcy on bank financing nd firm investment. A 2005 reform introduces reorganization procedures facilitating loan renegotiation. The 2006 reform subsequently...

Understanding the dynamics of the leverage ratio is at the heart of the empirical research about firms' capital structure, as they can be very different under alternative theoretical models. The pillars of almost all empirical applications are the maintained assumptions of poolability and...

We study the patterns of political selection in majoritarian versus proportional systems. Political parties face a trade-off in choosing the mix of high and low quality candidates: high quality candidates are valuable to the voters, and thus help to win the elections, but they crowd out the...

Does welfare improve when ?firms are better informed about the state of the economy and can better coordinate their decisions? We address this question in an elementary business-cycle model that highlights how the dispersion of information can be the source of both nominal and real rigidity....

We consider real pre-Hilbert modules H on Archimedean f-algebras A with unit e. We provide conditions on A and H such that a Riesz representation theorem for bounded/continuous A-linear operators holds.

Frustration, anger, and aggression have important consequences for economic and social behavior, concerning for example monopoly pricing, contracting, bargaining, tra¢ c safety, violence, and politics. Drawing on insights from psychology, we develop a formal approach to exploring how...

We develop, and experimentally test, models of informal agreements. Agents are assumed to be honest but suffer costs of overcoming temptations. We extend two classical bargaining solutions ?split-the-difference and deal-me-out ?to this informal agreement setting. For each solution there are two...

We analyze the effort allocation choices of incumbent politicians when voters are uncertain about politician preferences. There is a pervasive incentive to “posture” by overproviding effort to pursue divisive policies, even if all voters would strictly prefer to have a consensus policy...

Existant studies of confl ict, negotiation and international relations do not take into account that the institutions used to resolve disputes shape the incentives for entering disputes in the first place. Because engagement in a costly and destructive war is the `punishment' for entering a...