We study the valuation and hedging of unit-linked life insurance contracts in a setting where mortality intensity is governed by a stochastic process. We focus on model risk arising from different specifications for the mortality intensity. To do so we assume that the mortality intensity is...

Within a default intensity approach we discuss the optimal exercise of the callable and convertible bonds. Pricing bounds for convertible bonds are derived in an uncertain volatility model, i.e. when the volatility of the stock price process lies between two extreme values.

When a multi-plant firm must close one unit due to declining demand it can choose between two alternatives. On the one hand, the firm can announce a certain span of time in which the plants are evaluated according to relative performance with the least performing plant being shut down in the end...

Confirmation bias, which refers to unintentional and unknowing selectivity in the use of evidence, belongs to the major problems faced by organizations. In this article, we discuss job rotation as a natural solution to this problem. In a nutshell, adopting job rotation provides an organization...

A game-theoretic framework that allows for explicitly randomized strategies is used to study the e ect of ambiguity aversion on equilibrium outcomes. The notions of 'independent strategies' as well as of 'common priors' are amended to render them applicable to games in which players lack...

We characterize the Pareto-frontier in a simple Mirrleesian model of income taxation. We show how the second-best frontier which incorporates incentive constraints due to private information on productive abilities relates to the first-best frontier which takes only resource constraints into...

We consider an economic model of child development with multiple stages. Due to incomplete information, parents are not able to tailor their investments to their child's type when the child is young. We show that incomplete information weakens the importance of early investments in children when...

We develop a dynamic model of political competition. Each party has a policymotivated ideological wing and an office-motivated opportunistic wing. A blockade arises if inner-party conflict stops policy implementation. We use this model to study whether early elections should be used to overcome...

We explore how the threat of entry influences the innovation activity of an incumbent. We show that the incumbent's investment is hump-shaped in the entry threat. When the entry threat is small and increases, the incumbent invests more to deter entry, or to make it unlikely. This is due to the...

We study how an optimal income tax and an optimal public-goods provision rule respond to preference and productivity shocks. A conventional Mirrleesian treatment is shown to provoke manipulations of the policy mechanism by individuals with similar interests. We therefore extend the Mirrleesian...