Does the stock market exert short-term pressure on listed firms, do they respond, and is this response value reducing? We show that limited investor horizons indeed have those consequences, as follows. First, informative stock prices increase firm value; in our...

We show that, consistent with empirical evidence, access to order flow information allows traders to supply liquidity via contrarian marketable orders. Lack of market transparency can make liquidity demand upward sloping, inducing strategic complementarity and multiple equilibria. Then an initial...

We show that in a canonical model with heterogeneous entrepreneurs, financial frictions, and an imperfectly elastic supply of capital, a fall in the interest rate has an ambiguous effect on aggregate economic activity. In partial equilibrium, a lower interest rate raises...

Governments often support private credit through guarantee schemes, which compen-sate private lenders in the event of borrower default. A key feature of such schemes isthat they rely on private banks to allocate guarantees among borrowers. Yet the role ofbanks in...

We examine a supply chain with a single risk-averse manufacturer who purchases from suppliers and sells to consumers. Within this context, we focus on two channels that drive blockchain adoption by the manufacturer: manufacturer risk aversion and consumer information asymmetry....

This paper develops a methodology to solve dynamic principal-agent problems in which the agent features present-biased time preferences and naive beliefs. There are three insights. First, the problem has a recursive representation using the agent's perceived continuation value as a...