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We propose a boundedly-rational model of opinion formation in which individuals are subject to persuasion bias; that is, they fail to account for possible repetition in the information they receive. We show that persuasion bias implies the phenomenon of social influence, whereby one's influence on group opinions depends not only on accuracy, but also on how(More)
We analyze the design and renegotiation of covenants in debt contracts as a specific example of the contractual assignment of property rights under asymmetric information. In particular, we consider a setting where managers are better informed than the lenders regarding potential transfers from debt to equity that are associated with future investments. We(More)
We consider a " managerial optimal " framework for top executive compensation, where top management sets their own compensation subject to limited entrench-ment, instead of the conventional setting where such compensation is set by a board that maximizes firm value. Top management would like to pay themselves as much as possible, but are constrained by the(More)
This paper explores the impact of target CEOs' retirement preferences on the incidence, the pricing, and the outcomes of takeover bids. Mergers frequently force target CEOs to retire early, and CEOs' private merger costs are the forgone benefits of staying employed until the planned retirement date. Using retirement age as a proxy for CEOs' private merger(More)
Most theories and experimental studies of choice under uncertainty focus on choices between alternatives with known probability distributions. In many real-life contexts, however, the distribution of payoffs is not known, but have to be estimated from observations of outcomes. March (1996) illustrated how such experiential learning could produce seemingly(More)
Angiogenesis is an important component of organogenesis and wound repair and occurs during the pathology of oncogenesis, atherogenesis, and other disease processes. Thus, it is important to understand the physiological mechanisms that control neovascularization, especially with methods that permit the molecular dissection of the phenomenon in vivo.(More)
Do bankrupt firms impose negative externalities on their non-bankrupt competitors? We propose and analyze a collateral channel in which a firm's bankruptcy reduces collateral values of other industry participants, thereby increasing the cost of external debt finance industry wide. To identify this collateral channel, we use a novel dataset of secured debt(More)
For voters with " social " preferences, the expected utility of voting is approximately independent of the size of the electorate, suggesting that rational voter turnouts can be substantial even in large elections. Less important elections are predicted to have lower turnout, but a feedback mechanism keeps turnout at a reasonable level under a wide range of(More)
Traditional real options models demonstrate the importance of the " option to wait " due to uncertainty over future shocks to project cash flows. However, there is often another important source of uncertainty: uncertainty over the permanence of past shocks. Adding Bayesian uncertainty over the permanence of past shocks augments the traditional option to(More)