Worker incentive schemes are invariably assumed to be administered by an owner-entrepreneur who has an incentive to understate worker performance after the event. While tournaments can overcome this problem, they discourage cooperation between workers. We show that a professional manager concerned with equality between workers and with avoiding bankruptcy rather than maximizing shareholder wealth will conduct a tournament that preserves individual effort incentives while promoting cooperation between workers. The theory predicts lower debt levels and more compressed pay scales as cooperation becomes more important. In the limit this becomes a group bonus scheme, supported by "blue-chip" debt.

Persons' expectations regarding their ultimate life span provide a tractable empirical opportunity to test for rational expectations. To the extent people only utilize information from "current life tables, " they underestimate the more relevant ultimate life expectancy that results from on-going improvements in mortality experience not reflected in these tables. The expectations observed in the authors' empirical work are not consistent with rational-expectations models. All available information about life expectancies and their trends were not used by the surveyed households in forming life-span expectations. This deficiency precludes correct estimation of the ultimate life expectancy necessary for informed life-cycle choices. Copyright 1992 by MIT Press.

The paper analyzes lead-lag relationships for six major stock market indexes: New York S&P 500, Tokyo Nikkei, London FT–30, Hong Kong Hang Seng, Singapore Straits Times, and Australia All Ordinaries, for time periods before, during, and after the October 1987 market crash. Unidirectional and bidirectional causality tests are conducted by means of the Granger methodology. Practically no lead-lag relationships are found for the pre-crash and post-crash periods. However, important feedback relationships and unidirectional causality are detected for the month of the crash. There is also an increase in contemporaneous causality during and after the month of the crash. In general, our findings suggest that the October 1987 market crash probably was an international crisis of the equity markets and that it might have begun simultaneously in all the national stock markets.

Introduction Get access Lawrence F. Katz Lawrence F. Katz Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 107, Issue 1, February 1992, Page i, https://doi.org/10.2307/2118321 Published: 01 February 1992