The authors develop a multiperiod auction model in which multiple privately informed agents strategically exploit their long-lived information. They show that such traders compete aggressively and cause most of their common private information to be revealed very rapidly. In the limit, as the interval between auctions approaches zero, market depth becomes infinite and all private information is revealed immediately. These results are in contrast to those of Albert S. Kyle (1985) in which the monopolistic informed trader causes his information to be incorporated into prices gradually and, when the interval between auctions is vanishingly small, market depth is constant over time.

Suppose that you must choose between lotteries S (safer) and R (riskier) shown in the top half of Figure 1. There are 100 possible states of the world and the consequence of S and R are indicated for each state. The states of the world with the consequence win are separate from the states with the consequence win $20,000. You may find S less appealing knowing that if you choose it and one of the states 71-100 occurs you would have received $20,000 had you picked R. Suppose that you must choose between lotteries S' and R' shown in the bottom half of Figure 1. Though the prospects (probability distribution of consequences) of S' and R' are identical to those of S and R, the states of the world with positive payoffs overlap. You may find S' more appealing knowing that if you choose it and one of the states 1-30 occurs you would have received $20,000 had you picked R', but S' pays an $8,000 consolation prize. A series of papers by Graham Loomes (1988a, b, 1989) and Chris Starmer and Robert Sugden (1989) provides evidence that in evaluating identical prospects the juxtaposition of consequences against different states of the world has a systematic effect on choice under as predicted by regret theory (David E. Bell, 1982; Peter C. Fishburn, 1982; Loomes and Sugden, 1982, 1987a). Regret effects violate expected utility theory and all other prospect-based theories of choice. All of the laboratory evidence of regret or juxtaposition effects, however, has been generated under the problem representation in Figure 1: the matrix of state-contingent consequences. While Loomes (1988b p. 468) argues that evidence of regret effects indicates that prospect-based theories ...may all be failing to capture an important element in decision making under uncertainty, this paper suggests that the experimental evidence of regret effects observed so far is specific to the matrix-problem representation. Nearly 400 subjects completed versions of two questionnaires in which choice problems were presented in different formats. The juxtaposition of consequences sways choices, but only under the matrix presentation. The first questionnaire indicates that regret effects are not observed when statecontingent consequences are described by ticket numbers, rather than a matrix. The second questionnaire indicates that if the matrix format is changed slightly to a simple proportional format subjects apparently compare prospects and ignore the juxtaposition of consequences. Regret theory predicts that choice depends on the juxtaposition of consequences, but regret effects should be invariant to different representations of state-contingent consequences.

Economic theory been under severe attack in recent years. The source of this attack been the observation of apparently robust behavioral in decisions that experimental subjects make in controlled environments. The implication of these observations drawn by some is that many of the fundamental tenets of economic theory are systematically misleading as a descriptive model of human behavior. Many alternative models of individual and group behavior have been proposed which can account for some or all of the apparent anomalies. In the Theory and Misbehavior of FirstPrice Auctions (Harrison, 1989), I argued that the effort to extend or generalize received auction theory as a response to such was misdirected. Specifically, I argued that the observed in the experiments in question may simply reflect the failure of the experiment to meet widely accepted sufficient conditions for a valid controlled experiment proposed by Vernon Smith (1982 pp. 930-9). The result of this failure is simply that the opportunity cost of in these experiments is, by any reasonable standard, minuscule. Observed anomalies may then not be at all: they reflect theoretically consistent behavior under conditions where misbehavior is virtually costless. My critique is quite general in going well beyond auction theory and sealed-bid experiments. Perhaps for this reason there is some truth in the assessment of John D. Hey (1991 p. 195) that it has stirred the passions of the experimental community throughout America. The sad corollary of that assessment, however, is that experimentalists must be a pretty dull lot if such modest concerns as mine stir their passions. Section I restates the payoff-dominance critique in general terms to introduce the nonexperimentalist to the main issues. To address some of the issues raised by my critics, Section II contains a detailed numerical example of an important experimental procedure for eliciting the certainty-equivalent of any lottery that uses the G. M. Becker et al. (1964) procedure. In Section III, the generality of the problem is briefly catalogued, so as to emphasize that this is a debate over much broader methodological matters than sealed-bid auction experiments. Section IV addresses directly some of the specific comments of my critics. Section V identifies a number of qualifications to my critique of existing experimental practice.

ABSTRACT This paper examines daily excess bond returns associated with announcements of additions to Standard and Poor's Credit Watch List, and to rating changes by Moody's and Standard and Poor's. Reliably nonzero average excess bond returns are observed for additions to Standard and Poor's Credit Watch List when an expectations model is used to classify additions as either expected or unexpected. Bond price effects are also observed for actual downgrade and upgrade announcements by rating agencies. Excluding announcements with concurrent disclosures weakens the results for downgrades, but not upgrades. The stock price effects of rating agency announcements are also examined and contrasted with the bond price effects.

Reviews the book "Experimental Tests of Auditing As a Credibility Generating Mechanism," by Nicholas Dopuch and Ronald R. King.

Nasser Daneshvary, Henry W. Herzog, Jr., Richard A. Hofler, Alan M. Schlottmann, Job Search and Immigrant Assimilation: An Earnings Frontier Approach, The Review of Economics and Statistics, Vol. 74, No. 3 (Aug., 1992), pp. 482-492

The authors provide new evidence regarding the degree of integration among markets for stocks, futures, and options prior to and during the October 1987 market crash. Where previous analyses have resulted in recommendations for the implementation of circuit breakers, the coordination of margin requirements across markets, and changes in regulatory jurisdiction, their analysis indicates that delinkage between markets during the crash was primarily caused by an antiquated mechanism for processing stock-market orders. The results suggest that market integration may be better served by efficient order execution than by further restricting markets.

ABSTRACT This paper develops and tests hypotheses that explain the choice of accounts receivable management policies. The tests focus on both cross‐sectional explanations of policy‐choice determinants, as well as incentives to establish captives. We find size, concentration, and credit standing of the firm's traded debt and commercial paper are each important in explaining the use of factoring, accounts receivable secured debt, captive finance subsidiaries, and general corporate credit. We also offer evidence that captive formation allows more flexible financial contracting. However, we find no evidence that captive formation expropriates bondholder wealth.

This paper develops and tests hypotheses that explain the choice of accounts receivable management policies. The tests focus on both cross-sectional explanations of policy-choice determinants, as well as incentives to establish captives. The authors find size, concentration, and credit standing of the firm's traded debt and commercial paper are each important in explaining the use of factoring, accounts receivable secured debt, captive finance subsidiaries, and general corporate credit. They also offer evidence that captive formation allows more flexible financial contracting. However, the authors find no evidence that captive formation expropriates bondholder wealth.