When information is costly, a seller may wish to prevent prospective buyers from acquiring information, for the cost of information acquisition ultimately is borne by the seller. A seller can achieve the desired prevention through posted-price selling, by offering prospective buyers a discount. No such prevention is possible in the case of an auction. We establish the result that the seller prefers posted-price selling when the cost of information acquisition is high and auctions when it is low. We view corporate bonds as an instance of the former case, and government bonds as an instance of the latter.

Using the Panel Study of Income Dynamics (PSID), we test Costa and Kahn’s colocation hypothesis, which predicts that power couples—couples in which both spouses have college degrees—are more likely to migrate to the largest cities than part‐power couples or power singles. We find no support for this hypothesis. Instead, regression analyses suggest that only the education of the husband and not the joint education profile of the couple affects the propensity to migrate to large metropolitan areas. The observed location trends are better explained by higher rates of power couple formation in larger metropolitan areas.

Between 1996 and 2005 the number of central banks that publish a financial stability review (FSR) increased from 1 to 40. A FSR may contribute to financial stability, increase accountability of authorities responsible for financial stability, and strengthen co-operation between the various authorities. The occurrence of a banking crisis in the past, income per capita, and European Union membership increase the likelihood that a FSR is published. The content of FSRs differs widely; on average only 33% of the indicators as suggested by the IMF is actually published. The amount of information provided seems unrelated to the health of the banking system.

Existing empirical studies provide little support for the theoretical prediction that market makers rebalance their inventory through revisions of quoted prices. This study provides evidence that the NYSE's specialist does engage in significant inventory rebalancing, but only when not constrained by the affirmative obligation to provide liquidity imposed by the Price Continuity rule. The evidence also suggests that such obligations are associated with better market quality, but impose significant costs on the specialist. The specialist mitigates these costs through discretionary trading when the rule is not binding. These findings shed light on how exchange rules affect market makers’ behavior and market quality.

This paper investigates the effects of market-wide changes in health insurance by examining the single largest change in health insurance coverage in American history: the introduction of Medicare in 1965. I estimate that the impact of Medicare on hospital spending is over six times larger than what the evidence from individual-level changes in health insurance would have predicted. This disproportionately larger effect may arise if market-wide changes in demand alter the incentives of hospitals to incur the fixed costs of entering the market or of adopting new practice styles. I present some evidence of these types of effects. A back of the envelope calculation based on the estimated impact of Medicare suggests that the overall spread of health insurance between 1950 and 1990 may be able to explain about half of the increase in real per capita health spending over this time period.

Richard Posner's Catastrophe: Risk and Response (Oxford University Press, 2004) examines four risks whose worst cases could end advanced human civilization or worse: asteroid impacts, a catastrophic chain reaction initiated in high-energy particle accelerators, global climate change, and bioterrorism. He argues that these all warrant more thought and response than they are receiving, and that they can usefully be assessed using a simple analytic framework based on cost–benefit analysis. This essay reviews knowledge of these risks and critically examines Posner's claims for a consistent analytic approach. While the conclusions that each risk merits more thought and effort appear persuasive, these rely on ad hoc arguments specific to each risk. The general analytic claims do not hold up well, as Posner develops his proposed framework thinly and applies it unevenly. Applying such a framework consistently to catastrophic risks would require engaging some fundamental problems that Posner does not address. The book's major contributions are to identify and describe these risks, highlight the inadequate attention they are receiving, and advance a persuasive argument for their more serious examination.