Job Market Signaling and Employer Learning This paper extends the job market signaling model of Spence (1973) by allowing firms to learn the ability of their employees over time. Contrary to the model without employer learning, we find that the Intuitive Criterion does not always select a unique separating equilibrium. When the Intuitive Criterion bites and information is purely asymmetric, the...

This study extends from Liu and Mei (1992) by further investigation of assets, real estate related securities, which includes both equity and mortgage real estate investment trusts (REITs), the stocks of builderand owner-companies, and mortgagebacked securities (MBSs). There are five major findings. First, expected excess returns of real estate related securities are more predictable than the e...

We Americans believe that there is basically one rational way to live: ours. There is one legitimate path of development, which leads toward democracy, transparency, and a competitive market system. Our dealings with the rest of the world are based on this assumption. We reinforce the point by dispatching economists, foreign aid workers, and religious missionaries to teach the world how to live...

T he single most important ingredient for transformational high-performance improvement is leadership; yet we have a leadership vacuum at the frontline. The 3 Ts of truth, trust, and teamwork offer a conceptual framework of actions that can be taken to engage trustees, senior administrative leaders, independent and employed physicians, and frontline nurses and staff who are the servant leaders ...

Combinatorial auctions are promising auction formats for industrial and public procurement. Potential advantages of using combinatorial auctions include lower overall spend, low transaction costs for multi-item negotiations, fairness and market transparency for suppliers, as well as high allocative efficiency. A number of fundamental design considerations are relevant to the application of comb...

Consumers increasingly care about firms’ ethical conduct (e.g., labor and environmental practices) when making their consumption choices. This note presents a simple framework to highlight the possibility that this development may induce a less desirable production technology choice and bring about lower market transparency. When faced with consumers’ greater moral concerns, more firms may choo...

Secondary markets for long-term assets might be illiquid due to adverse selection. In a model in which moral hazard is confined to project initiation, I find that: (1) when agents expect a liquidity dry-up on such markets, they optimally choose to self-insure through the hoarding of non-productive but liquid assets; (2) such a response has negative externalities as it reduces ex-post market par...

In a model with endogenous number of innovating firms, we show that whether patent protection increases R&D investment is ambiguous, and depends on the market demand function and the cost of R&D. If the market size increases with number of firms, patent protection reduces R&D investment if the cost of R&D is sufficiently high, and higher product differentiation increases the possibility of lowe...