The empirical results presented suggest that imperfect information is present in the Treasury bill market. The mean auction price for 3-month bills is, on average, four basis points below the comparable secondary market price for the 1973-84 period. This "downward biasing" is positively related to the anticipated amount of dispersion of auction bids. This suggests that auction bidders use a bidding strategy that accounts for their lack of agreement about the value of the bill. Further, the secondary bill market learns from the bill auction, implying that these two markets aggregate traders' private information differently.

The hypothesis that price discrimination based on willingness to pay for quality can occur in multifirm markets is confirmed using microdata on gasoline retailing. A test that discriminates between price structures associated with discrimination and with cost-driven, competitive differentials is developed and implemented with controls for variation in outlet and market characteristics. A second test based on profitability variation rejects a competitive, peak-load pricing explanation for the observed price dispersion. The data suggest that price discrimination at the retail level adds at least 9¢ a gallon to the average price of full-service gasoline.

Presents a correction to an article on rational expectations in business cycles. (This abstract was borrowed from another version of this item.)