This paper explores the role of firm boundaries by abstracting from the property rights approach, which is not applicable to the increasingly important human-capital intensive firms. By focusing on firm boundaries’ role as ‘information barriers’ that blur employees’ individual outside identities, we find that firms boundaries matter because they can alter investment specifity and hence alleviat...

This paper studies a continuous-time market where an agent, having specified an investment horizon and a targeted terminal mean return, seeks to minimize the variance of the return. The optimal portfolio of such a problem is called mean-variance efficient à la Markowitz. It is shown that, when the market coefficients are deterministic functions of time, a mean-variance efficient portfolio reali...

We compare emissions taxes and quotas when a (strategic) regulator and (non-strategic) firms have asymmetric information about abatement costs, and all agents use Markov perfect decision rules. Firms make investment decisions that affect their future abatement costs. For general functional forms, firms’ investment policy is information-constrained efficient when the regulator uses a quota, but ...

In a financial market, for agents with long investment horizons or at times of severe market stress, it is often changes in the asset price that act as the trigger for transactions or shifts in investment position. This suggests the use of price thresholds to simulate agent behavior over much longer timescales than are currently used in models of order-books. We show that many phenomena, routin...

This paper studies pre-marital parental investments in their children’s wealth where spousal wealth is a public good in marriage. By investing in their children’s wealth, parents increase the wealth of their children and the quality of the spouses that their children can marry. In large marriage markets, the hedonic return to investment internalizes all the external benefits of pre-marital inve...

Restricting insider trading enhances price informativeness by encouraging investors to acquire and trade on private information. Therefore, corporate investment should be more sensitive to stock prices and more efficient as stock prices provide more precise information to guide the investment decisions. Consistent with this hypothesis, we find that the investment-to-price sensitivity increases ...

In this paper, we investigate how the accounting measurement basis affects the capital market pricing of a firm’s shares, which, in turn, affects the efficiency of the firm’s investment decisions. We distinguish two broad bases for accounting measurements: input-based and output-based accounting. We argue that the structural difference in the two measurement bases leads to a systematic differen...

What happens if the Xi ’s take values in a (real) Banach space (B, ‖ · ‖)? In such cases, in particular when the square of the norm ‖ · ‖ is not given by an inner product, we are aiming at inequalities of the following type: Let X1, X2, . . . , Xn be independent random vectors with values in (B, ‖ · ‖) with EXi = 0 and E‖Xi‖2 < ∞. With Sn := ∑n i=1 Xi we want to show that E‖Sn‖ ≤ K n ∑ i=1 E‖Xi...

In important papers on cake-cutting – one of the key areas in fair division and resource allocation – the measuretheoretical fundamentals are not fully correctly given. It is not clear (i) which family of sets should be taken for the pieces of cake, (ii) which set-functions should be used for evaluating the pieces, and (iii) which is the relationship between various continuity properties appear...