We analyze data from experimental duopoly markets to assess the role information plays in facilitating collusion. In these markets, profitability can be common knowledge or private information. Market outputs are estimated in structures with symmetric and asymmetric costs under the two information conditions. Symmetric markets are more cooperative when profitability is common knowledge; asymmetric market outputs are unaffected by information differences. However, common knowledge in asymmetric markets increases the share of the output produced by the low-cost producer, and therefore increases industry efficiency.

This paper provides a global asset pricing perspective on the debate over the relation between predetermined attributes of common stocks, such as ratios of price-to-book-value, cash-flow, earnings, and other variables to the future returns. Some argue that such variables may be used to find securities that are systematically undervalued by the market, while others argue that the measures are proxies for exposure to underlying economic risk factors. It is not possible to distinguish between these views without explicitly modelling the relation between such attributes and risk factors. We present an empirical framework for attacking the problem at a global level, assuming integrated markets. Our perspective pulls together the traditional academic and practitioner viewpoints on lagged attributes. We present new evidence on the relative importance of risk and mispricing effects, using monthly data for 21 national equity markets. We find that the cross-sectional explanatory power of the lagged attributes is related to both risk and mispricing in the two-factor model, but the risk effects explain more of the variance than mispricing.

This paper reports measures of preference parameters relating to risk tolerance, time preference, and intertemporal substitution. These measures are based on survey responses to hypothetical situations constructed using an economic theorist's concept of the underlying parameters. The individual measures of preference parameters display heterogeneity. Estimated risk tolerance and the elasticity of intertemporal substitution are essentially uncorrelated across individuals. Measured risk tolerance is positively related to risky behaviors, including smoking, drinking, failing to have insurance, and holding stocks rather than Treasury bills. These relationships are both statistically and quantitatively significant, although measured risk tolerance explains only a small fraction of the variation of the studied behaviors.

This paper reports the results of an experiment that examines the influence of uncertainty about the probability that a future loss will occur ("ambiguity") on auditors and financial statement users' judgments about appropriate reference to contingent losses in audit reports. Application of Einhorn and Hogarth's (1985) ambiguity model suggests that, with respect to losses of tow (high) probability, both auditors and users will act as if an ambiguous probability of loss is higher (lower) than a precise probability of the same magnitude, thus demonstrating a conservative (unconservative) reaction to ambiguity. In addition, since auditors may jeopardize client relations when they unnecessarily make audit report reference to contingent losses, auditors may react less conservatively to ambiguity than do users. The results of the experiment support these predictions.

This paper reports the results of an experiment that examines the influenceof uncertaintyabouttheprobabilitythatafuturelosswilloccur (ambiguity) on auditors' and financial statement users' judgments about appropriate reference to contingent losses in audit reports. Application of Einhorn and Hogarth's (1985) ambiguity model suggests that, with respect to losses of low (high) probability, both auditors and users will act as if an ambiguous probability of loss is higher (lower) than a precise probability of the same magnitude, thus demonstrating a conservative (unconservative) reaction to ambiguity. In addition, since auditors may jeopardize client relations when they unnecessarily make audit report reference to contingent losses, auditors may react less conservatively to ambiguity than do users. The results of the experiment support these predictions.

Myopic loss aversion is the combination of a greater sensitivity to losses than to gains and a tendency to evaluate outcomes frequently. Two implications of myopic loss aversion are tested experimentally. 1. Investors who display myopic loss aversion will be more willing to accept risks if they evaluate their investments less often. 2. If all payoffs are increased enough to eliminate losses, investors will accept more risk. In a task in which investors learn from experience, both predictions are supported. The investors who got the most frequent feedback (and thus the most information) took the least risk and earned the least money.

This article examines incentives for adopting antitakeover charter amendments (ATAs) that are associated with compensational contracts. The evidence is consistent with the hypothesis that antitakeover measures such as ATAs help managers protect above-market levels of compensation. Chief executive officers (CEOs) of firms that adopt ATAs receive higher salaries and more valuable option grants than CEOs at similar firms that do not adopt them. Furthermore, the magnitude of this difference increases following ATA adoption. The evidence is inconsistent with the hypothesis that ATAs facilitate the writing of efficient compensation contracts.

This paper examines the wealth effects of a decision by the Office of Thrift Supervision (OTS) to permit interstate branching for federally chartered savings and loan associations (SLAs). An event study of key OTS announcements in 1991 and 1992 is conducted based on samples of 38 federally chartered SLAs and 88 commercial banks. Large SLAs and commercial banks generally experienced significant positive wealth effects but little or no reaction was found for smaller depository institutions. These findings provide early evidence that interstate branching powers for depository institutions under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 will tend to benefit large institutions accelerating the trend toward consolidation, though without necessarily compromising the viability of smaller institutions.

This paper studies quarterly employment flows of approximately 10,000 U.S. manufacturing establishments. We use establishments' hours-week to construct measures of the deviation between desired and actual employment and use these as the establishments' main state variables. Our main findings are: (i) micro-economic adjustment functions are nonlinear, with plants adjusting disproportionately to large shortages; (ii) adjustments are often either large or nil, suggesting the presence of nonconvexities in the adjustment cost technologies; (iii) the bulk of average employment fluctuations is accounted for by aggregate, rather than reallocation, shocks; and (iv) microeconomic nonlinearities amplify the impact of large aggregate shocks.