Journal Article Continuous and Discrete Time Approaches to a Maximization Problem Get access L. G. Telser, L. G. Telser University of Chicago Search for other works by this author on: Oxford Academic Google Scholar R. L. Graves R. L. Graves University of Chicago Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 35, Issue 3, July 1968, Pages 307–325, https://doi.org/10.2307/2296664 Published: 01 July 1968

Valuation, Intangible assets, Components of Goodwill, Acquisitions

I model the effect of associative memory on asset prices. The model includes mood-congruent memory, which predicts that the subjective goodness (or badness) of the agent’s affective state (e.g., mood) is a cue for positive (negative) information stored in long-term memory. I also include rehearsal, which implies that data recalled in the recent past are more likely to be recalled in the present. I show that mood-congruent memory causes the set of recalled information to be biased, and rehearsal generates autocorrelation in the biases across periods. The theory provides novel explanations for short-run continued overreaction to news, long-run correction of these effects, and excess volatility. I also make the novel predictions that excess volatility is highest during downturns, price biases are increasing in fundamental volatility, knowledge/experience may intensify these biases, and asset prices exhibit excess comovement.

We document that defined benefit pension plans with significant holdings in private equity (PE) earn substantially greater returns than plans with small holdings, in both the 1990s and the 2000s. A one standard deviation increase in PE holdings is associated with 4% greater returns per year. Up to one-third of this outperformance comes from lower costs that we link to economizing on costly intermediation by avoiding fund-of-funds and investing directly. The bulk of the outperformance comes from superior gross returns only partially explained by access and experience. We conjecture that larger PE investors have superior due diligence and ability to bridge information asymmetries in PE.

We analyze the relationship between how long an employer has been in business (firm age) and wages. Using data from special supplements to the Survey Research Center’s monthly Survey of Consumers, we find that firms that have been in business longer pay higher wages (as previous studies found), but when we control for worker characteristics, the relationship becomes insignificant or negative. There is some evidence that the relationship is not monotonic, with wages falling and then rising with years in business. Established employers appear to make greater use of back‐loaded compensation, consistent with their higher probability of remaining in business.

IN The general theory of employment, interest and money we can discover what gives a book eternal youth. It is the quality of imperishable relevance to the essential, insoluble problems of time-bound humanity. A problem solved, a situation resolved into its ultimate constituents, a veil finally and irrevocably withdrawn, is the end of a matter. can salute the author who did these things, but we can no longer look into a living face and see our own enigmas and perplexities reflected there. Keynes's book, however, is a great enigma; it is the image of the vaster enigma of conduct, decision, and history itself. It is doubtless paradoxical to say that Keynes's book achieves its triumph by pointing out that the problems it is concerned with are essentially beyond solution. The business of scholars, scientists and philosophers is to gain and give understanding. But only the best of them tell us that they can describe only the shadows in the mouth of the cave. All problems are solvable, the characteristic stance of our civilization, afflicts us with a terrible myopia. If all problems are to be solvable, we must be very careful what kinds of thing we admit to the category of problems. They must be carefully tailored to fit our selfassumed omni-competence. The task which suits us, which we can do with astounding ingenuity and surprising effect, is that of analysis, the application of reason to the dismemberment of a body of information declared or assumed to be self-sufficient, and its re-constitution into a prescription for conduct. It is the selfsufficiency of such supposed bodies of information which removes them so immeasurably far from the harsh truth of things. Why was not Keynes satisfied with the Treatise? It had the Keynesian touch. It knotted up a mass of perplexities and cut them with one Alexandrine stroke. The Fundamental Equations were extremely concise and ostensibly simple. Had Myrdal been at Keynes's elbow to interpret the dream, they would have done the trick, thrown back the bolt and enabled the gates to swing open upon an undiscovered country. What was wanted was some clue to the nature of the inducement to invest. Keynes in the Treatise sought for it in a WicksellianAustrian theory of the nature of capital. (If one draws a diagram of what Keynes says about capital in the Treatise, there will appear a Hayekian triangle of the stages of production.) But this did not seem to go quite to the heart of the matter. What, in its essential nature, was the Natural Rate of Interest? This was the difficulty, the source of dissatisfaction, that led to a fresh attempt as soon as the Treatise was published. The General theory devotes a whole Book to the Inducement to Invest. The apparatus is the confrontation with each other of the Marginal Efficiency of Capital and the rate of interest. What is the M.E.C.? learn its real nature in Section V of Chapter 11. It depends on expectation. And what does expectation depend on? To find that stated, with full uncompromising explicitness, we have to look in a part of the canon which few economists seem able to endure the sight of-or else they have never heard of it. It is his reply to his critics. It appeared in the Quarterly Journal of Economics for February 1937, and it declares unequivocally that expectations do not rest on anything solid, determinable, demonstrable. We simply do not know. The General theory is a detour. (Is everything in economics a detour?) It is a detour from a path which might have led direct from the Treatise to the Q.J.E. article. Keynes and many of the readers of the Treatise were worried about how investment and saving could differ from each other. The dilemma needed only the same liberating insight that can ex-

Journal Article Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points Get access L. Hurwicz L. Hurwicz University of Minnesota Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 46, Issue 2, April 1979, Pages 217–225, https://doi.org/10.2307/2297046 Published: 01 April 1979 Article history Received: 01 November 1976 Accepted: 01 December 1978 Published: 01 April 1979

Journal Article Optimal Saving and Risk in Continuous Time Get access Lucien Foldes Lucien Foldes London School of Economics Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 45, Issue 1, February 1978, Pages 39–65, https://doi.org/10.2307/2297082 Published: 01 February 1978