A model of sequential bargaining with one-sided incomplete information is analyzed where, if an agreement is not reached, the agents go to court. A "deadline effect" emerges where much settlement occurs just prior to the trial and many cases proceed to court. If fixed costs are incurred during each bargaining period, a "U-shaped" pattern of settlement emerges. These patterns persist in the limit as the time between offers approaches zero. A model with an endogenous trial date is also considered and it is shown that even with complete information there exists inefficient equilibria where disputes are resolved in court.

Voluntary Disclosure, Interim reporting, Earnings volatility, Semiannual earnings disclosures

Though not conceived as a constant, the natural unemployment rate was taken to be invariant to supply shocks until the late seventies and to real demand shocks until now. The largely micro-theoretic model here is one in a series deriving the natural rate path from general equilibrium. In this model the labor market exhibits generalized real-wage rigidity, resulting from the use of "incentive wages" to combat shirking, and the asset backing shares is the firms' customers, arising from customer-market friction. One finding is that increased consumer demand drives up the natural rate by driving real interest rates up.

This paper is a study of the dynamics of the efficient distribution of consumption in an exchange economy with many consumers, each of whom is subject to private, idiosyncratic taste shocks. We propose a recursive method for finding feasible allocations that are incentivecompatible and that are Pareto optimal within this set. The method is applied to several parametric examples. We find that in an efficient allocation the degree of inequality continually increases, with a diminishing fraction of the population receiving an increasing fraction of the resources. We discuss the extent to which these allocations can be decentralized via market arrangements.

This paper considers estimation of truncated.and censored regression models with fixed effects. Up until now, no estimator has been shown to be consistent as the cross-section dimension increases with the time dimension fixed. Trimmed least absolute deviations and trimmed least squares estimators are proposed for the case where the panel is of length two, and it is proven that they are consistent and asymptotically normal. It is not necessary to maintain parametric assumptions on the error terms to obtain this result. A small scale Monte Carlo study demonstrates that these estimators can perform well in small samples.

It sometimes happens that the unobservable state vector of a linear dynamic model expressed in the state space is subject to known restrictions. Incorporation of this information into the Kalman filter procedure will increase the efficiency of estimation. It is shown that a simple augmentation of the measurement equation constrains the estimated state vector to obey the restrictions. The method applies whether the restrictions are time-invariant, time-varying, linear, or nonlinear.

Charles E. Boynton, Paul S. Dobbins, George A. Plesko, Earnings Management and the Corporate Alternative Minimum Tax, Journal of Accounting Research, Vol. 30, Studies on Accounting and Taxation (1992), pp. 131-153

This paper uses a unique data set to determine which dynamic model of tacit collusion best describes behaviour in a particular industry. The area investigated is a region of the Vancouver, British Columbia retail-gasoline market. Players are service-station managers who compete daily. Firms choose price in each period using strategies that depend on prices chosen in the previous period. Periodically, unanticipated demand shocks precipitate price wars. When shocks occur, the firms in the market must determine the new demand conditions and adjust their strategies. From an econometric point of view, slopes of intertemporal reaction functions are latent variables. The resulting system of equations with time-varying parameters is estimated via the Kalman filter. Different repeated-game oligopoly models correspond to different transition matrices for the latent variables. The models can thus be assessed in terms of their power to explain firm behaviour in this market.

Two hypotheses are tested in this paper. The first is whether the appropriate geographic market for certain banking services is national, instead of local. The second is whether the definition of banking "product" as all banking services is too broad.