Markets, Choice and Agency

Freedom, choice, and the sense of agency

The sense of agency is an intriguing aspect of human consciousness and is commonly defined as the sense that one is the author of their own actions and their consequences. In the current study, we varied the number of action alternatives (one, three, seven) that participants could select from and determined the effects on intentional binding which is believed to index the low-level sense of age...

Optimal Agency Relationships in Search Markets

We compare a seller’s agency regime, in which agents give sellers information about buyers’ willingness to pay, with a buyer’s agency regime, in which agents keep buyers’ information confidential. Aggregate gains from trade can be higher under either agency regime. Aggregate gains from trade are higher under buyer’s agency if traders expect to spend less time in the market under buyer’s agency....

Rational Choice in Experimental Markets

Portfolio choice and pricing in illiquid markets

This paper studies portfolio choice and pricing in markets in which immediate trading may be impossible. It departs from the literature by removing restrictions on asset holdings, and finds that optimal positions depend significantly and naturally on liquidity: When expected future liquidity is high, agents take more extreme positions, given that they do not have to hold those positions for lon...

Foreign Cash: Taxes, Internal Capital Markets and Agency Problems

U.S. multinational corporations (MNCs) hold significant amounts of cash abroad. Using a handcollected sample of large U.S. MNCs, we find that the percentage of cash trapped overseas has a significantly negative impact on the market value of a firm’s cash holdings. Such negative effect is more pronounced when firms are subject to higher repatriation tax rate, when firms have higher costs of rais...