infonet-economy

Cooper and Nyborg (2008) derive a tax-adjusted discount rate formula under a constant proportion leverage policy, investor taxes and risky debt. However, their analysis assumes zero recovery in default. We extend their framework to allow for positive recovery rates. We also allow for differences in bankruptcy codes with respect to the order of priority of interest payments versus...

Die Privatisierung von Gewinnen und die Sozialisierung von Verlusten der "Too big to fail"-Banken widersprechen den Grundprinzipien des Liberalismus.

In this paper technology adoption behaviour under (regulatory) no-anticipation of new technology, and imperfect competition in a tradable permits scheme (rents market) is investigated. The inter-dependence between the incentive to adopt a new technology and the allowance price is explicitly modelled. A firm's longterm incentives to adopt a new technology depend on the future...

In this paper the decisions of a firm's manager, in terms of exposure to a profitable but risky technology, distribution of dividends and (costly) re-injection of cash to ward off bankruptcy are studied. The analysis of the manager's optimal choices is done via a value function whose state variable is the firm's current level of reserves. Contingent on whether...

Under certain conditions, output related performance measurement and pay-for-performance produce negative outcomes. We argue that in public service, these negative effects are stronger than in the private sector. We combine Behavioural Economics and Management Control Theory to determine under which conditions this is the case. We suggest as alternatives to the dominant output...

Covariance matrix estimation and principal component analysis (PCA) are two cornerstones of multivariate analysis. Classic textbook solutions perform poorly when the dimension of the data is of a magnitude similar to the sample size, or even larger. In such settings, there is a common remedy for both statistical problems: nonlinear shrinkage of the eigenvalues of the sample...

People's desire for fair transactions can play an important role in negotiations, organizations, and markets. In this paper, we show that markets can also shape what people consider to be a fair transaction. We propose a simple and generally-applicable model of path-dependent fairness preferences, in which past experiences shape preferences, and we experimentally test the model...

Bulimia nervosa (BN) is a growing health concern and its consequences are especially serious given the compulsive nature of the disorder. However, little is known about the mechanisms underlying the persistent nature of BN. Using data from the NHLBI Growth and Health Study and
instrumental variable techniques, we document that unobserved heterogeneity plays a role in the...

We analyze the impact of bank internationalization on domestic market power (Lerner index) and risk for German banks. Risk is measured by the official declaration of regulatory authorities that a bank is distressed. We distinguish the volume of foreign assets, the number of foreign countries, and different modes of foreign entry. Our analysis has three main results. First, higher...