We present a theory of entrepreneurial behavior that explores the relationship between overconfidence and successful firm outcomes, such as acquisition or IPO. In our model, increasing overconfidence produces two conflicting effects on the probability of a successful outcome: it not only induces...

We develop an economic analysis in order to examine the effects of consumer, regulatory, and competitive pressure on firm investments in environmentally friendly production. Specifically, we ask: Why do firms vary in their levels of environmental innovation? Under what conditions are such...

We analyse the combined effects of bargaining power, managerial ability/effort, and risk-taking strategies on the choice of hedge fund (HF) incentive contracts, and hedge fund performance. In our model, the HF manager and outside investors first negotiate over the type of contract (asymmetric or...

Financial and industrial economists have increasingly recognized the interaction between product market competition and financing decisions of firms. This paper analyzes the relationship between product market competition (measured by Tobin's Q) and the capital structure of Chinese listed firms...

We analyze the effects of reciprocity on the performance of a two-player team working in a venture. The players initially negotiate a fair, ‘reference-point,' contract, which determines their cash-flow rights and the direction of the venture (in terms of a project-choice). They then exert...

We present a game-theoretic approach that addresses the trade dispute between Boeing and Airbus. We consider the US and EU governments' simultaneous decision to provide launch aid. Our analysis demonstrates that launch aid has a positive effect on economic welfare by promoting innovation and...

Behavioural economists are increasingly understanding that humans are not completely self-interested or emotionless, but often exhibit “other-regarding” behaviour. We develop a game-theoretic approach in which players gain utility from their own material payoffs, but who also develop...

Numerous studies have focused on the theoretical and empirical aspects of corporate capital structure since the 1960s. As a new branch of capital structure, however, debt maturity structure has not yet received as much attention as the debt-equity choice. We use the existing theories of...