This article develops a model in which quit rates, and thus the income distribution, depend on employee perceptions of the accuracy of employer assessments of individual productivity because these latter assessments affect wages. When employees believe that these assessments are accurate, income inequality tends to be high. The model can account for the negative correlation across some countries of inequality and the extent to which inequality is deemed to be excessive. It also fits the contrast in U.S. and French experiences concerning the tenure of highly educated workers with high wages relative to the tenure of lower‐paid workers.

Skidelsky's three-volume biography of Keynes, of which this is the third, gives us Keynes, entire. The meat of the biography lies in the well-constructed narrative and in the magnificent portraits of Keynes and his age. Robert Skidelsky has given us a superb intellectual biography.

Firms that go public produce information that influences the production decisions of their rivals as well as their own production decisions. If information-production costs are borne primarily by pioneering firms, market failures can occur in which both pioneers and followers remain private and make ill-informed investment decisions. Solving this coordination problem requires a transfer between pioneers and followers that leads to a more equitable distribution of information-production costs. We contend that investment banks can enforce such a transfer by effectively bundling IPOs within an industry. This suggests an explanation for clustering of IPOs through time and within industries. Journal of Economic Literature Classification Numbers: G24, G28, K32.

Intrastate branching deregulation allowed correspondent banks to enter downstream retail deposit markets. Integrated correspondent banks may engage in vertical foreclosure, raising prices to downstream rivals or extracting valuable competitive information. The Federal Reserve would then tend to gain market share from private correspondent banks. Deregulation of restrictions on the formation of multibank holding companies, in contrast, allowed other correspondents to enter, increasing competition. We test these hypotheses using a panel data set of respondent account balances. We find that the Federal Reserve became a more important supplier of correspondent services following branching deregulation and that market power in the correspondent market declined following multibank holding company deregulation. Journal of Economic Literature Classification Numbers: D43, G21, G28, L11.

We employ a certainty-equivalence framework to analyze the cost, value and pay/performance sensitivity of non-tradable options held by undiversified, risk-averse executives. We derive “executive value” lines, the risk-adjusted analogues to Black–Scholes lines. We show that distinguishing between “executive value” and “company cost” provides insight into many issues regarding stock option practice including: executive views about Black–Scholes values; tradeoffs between options, restricted stock and cash; exercise price policies; option repricings; early exercise policies and decisions; and the length of vesting periods. It also leads to reinterpretations of both cross-sectional facts and longitudinal trends in the level of executive compensation.