This paper analyzes a monopolist that markets successive generations of new and improving nondurable products. Prices, research intensity, and product innovations are derived as sequential equilibrium outcomes to a dynamic game with incomplete information. Asymmetric information is an important feature of the model. The monopolist is fully aware of the current product's quality, as are consumers who have tried it. However, the beliefs of other people are characterized by a probability distribution that depends on the monopolist's marketing strategy and the product's popularity. The analysis illustrates a new context in which price signaling might serve as a mechanism for ensuring that only high-quality products are marketed. More important, it shows how product life cycles are generated in the absence of signaling and how a reputation for producing high-quality goods becomes established in such cases.

This paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types, or occupations. Such differences affect the value of job-specific experience, inducing a career profile where certain types are sampled before others. More specifically, the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk. Then, after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations, panel data are used to estimate its underlying parameters. The hypothesis that people do not switch occupations is rejected against the alternative that they do, thus providing empirical support for the theoretical extension undertaken here.

This paper develops and implements a semiparametric estimator for investigating, with panel data, the importance of human capital and time nonseparable preferences to females when aggregate shocks are present. It provides a set of conditions for making statistical inferences about agents' expectations of their correlated future choices, from a short panel. Under the assumption that observed allocations are Pareto optimal, a dynamic model of female labour supply and participation is estimated, in which experience on the job raises future wages, and time spent off the job in the past directly affects current utility (or, indirectly through productivity in the nonmarket sector).

This paper is an empirical investigation of equilibrium restrictions on household consumption and male labor supply. It exploits a simple factor structure, rationalized by two assumptions, that household allocations are Pareto optimal and that the labor market is competitive. The paper estimates household preferences, and tests how well this parsimonious factor structure represents panel data on married couples and time series data on asset returns. Most of the estimates are roughly comparable to those found in previous work; no evidence against the simple factor representation is found and the intertemporal capital asset pricing model is not rejected.

Fewer women than men become executive managers. They earn less over their careers, hold more junior positions, and exit the occupation at a faster rate. We compiled a large panel data set on executives and formed a career hierarchy to analyze mobility and compensation. We find, controlling for executive rank and background, that women earn higher compensation than men, experience more income uncertainty, and are promoted more quickly. Among survivors, being female increases the chance of becoming chief executive officer. The unconditional gender pay gap and job-rank differences are primarily attributable to female executives exiting the occupation at higher rates than men.

We provide empirical restrictions of a model of optimal order submissions in a limit order market. A trader's optimal order submission depends on the trader's valuation for the asset and the trade-offs between order prices, execution probabilities and picking off risks. The optimal order submission strategy is a monotone function of a trader's valuation for the asset. We test the monotonicity restriction in a sample of order submissions and their realized outcomes from the Stockholm Stock Exchange. We do not reject the monotonicity restriction for buy orders or sell orders considered separately, but reject the monotonicity restriction for buy and sell orders considered jointly.

We estimate a principal-agent model of moral hazard with longitudinal data on firms and managerial compensation over two disjoint periods spanning 60 years to investigate increased value and variability in managerial compensation. We find exogenous growth in firm size largely explains these secular trends in compensation. In our framework, exogenous firm size works through two channels. First, conflicts of interest between shareholders and managers are magnified in large firms, so optimal compensation plans are now more closely linked to insider wealth. Second, the market for managers has become more differentiated, increasing the premium paid to managers of large versus small firms.

Government procurement contracts rarely have many bids, often only one. Motivated by the institutional features of federal procurement, this article develops a principal-agent model where a buyer seeks sellers at a cost and negotiates contract terms with them. The model is identified and estimated with data on IT and telecommunications contracts. We find the benefits of drawing additional sellers are significantly reduced because the procurement agency can extract informational rents from sellers. Another factor explaining the small number of bids is that sellers are relatively homogeneous, conditional on observed project attributes. Administrative hurdles and corruption appear to play very limited roles.

This paper develops a generalized Roy model with human capital accumulation, moral hazard, and career concerns. We identify and estimate the model with a large panel that matches data on publicly listed firms to information on their executives. The structural estimates obtained are used to decompose the firm‐size pay gap. We find that although total compensation and incentive pay increase with firm size, certainty‐equivalent pay decreases with firm size. In larger firms, and for more highly ranked executives, weaker signal quality about effort results in higher risk premiums. This risk premium accounts for roughly 80 percent of the firm‐size gap in total compensation. Larger firms are also willing to pay more than smaller ones to attract executives. Finally, the estimated coefficients on human capital accumulation from formal education and experience gained from different firms are individually significant, but their collective effect on firm‐size pay differentials nets out.

This paper develops a new method for estimating the structural parameters of (discrete choice) dynamic programming problems. The method reduces the computational burden of estimating such models. We show the valuation functions characterizing the expected future utility associated with the choices often can be represented as an easily computed function of the state variables, structural parameters, and the probabilities of choosing alternative actions for states which are feasible in the future. Under certain conditions, nonparametric estimators of these probabilities can be formed from sample information on the relative frequencies of observed choices using observations with the same (or similar) state variables. Substituting the estimators for the true conditional choice probabilities in formulating optimal decision rules, we establish the consistency and asymptotic normality of the resulting structural parameter estimators. To illustrate our new method, we estimate a dynamic model of parental contraceptive choice and fertility using data from the National Fertility Survey.