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Markets are increasingly used as information aggregation mechanisms to predict future events. If policymakers and managers use markets to guide policy and managerial decisions, interested parties may attempt to manipulate the market in order to influence decisions. We study experimentally the willingness of managers to base decisions on market information under the shadow of manipulation. We find that when there are manipulators in the market, managers under-utilize the information revealed in prices. Furthermore, mere suspicion of manipulation erodes trust in the market, leading to the implementation of suboptimal policies—even without actual manipulation. This paper was accepted by Yan Chen, behavioral economics and decision analysis.

Forward-looking information about climate risks is critical for decision makers, but the provision and accuracy of such information is limited. Innovative prediction-market designs could provide a mechanism to enhance applied climate research in an incentive-compatible way.

We analyze an environment with asymmetric information where a country tries to attract a multi-national corporation. The country can use both taxes and grants to meet its objective of maximizing net revenues. We show that when the country has private information it can often convey it via its choice of a tax-grant pair. When the tax rates are unbounded the country is able to extract the full surplus. The existence of an upper bound can in some cases reduce the payoff to a stronger country.

To understand the mechanisms behind bank run contagions, we conduct bank run experiments in a modified Diamond-Dybvig setup with two banks (Left and Right). The banks' liquidity levels are either linked or independent. Left Bank depositors see their bank's liquidity level before deciding. Right Bank depositors only see Left Bank withdrawals before deciding. We find that Left Bank depositors' actions signicantly affect Right Bank depositors' behavior, even when liquidities are independent. Furthermore, a panic may be a one-way street: an increase in Left Bank withdrawals can cause a panic run on the Right Bank, but a decrease cannot calm markets.

Half clock rate 4-bit flash A/D converters have been designed and fabricated in HRL's InP-HBT-OEIC technology. Two versions of the circuits (with and without on-board divider) have been characterized. The circuits utilize distributed resistor ladder structure to create the quantization reference voltages. Based on signal-to-noise-and-distortion measurements, the typical effective number of bits was calculated to 3.9 bits at 10 GS/S and 4.9 GHz analog input. The two circuit versions (with and without on-board divider) consume about 2.6 and 2.3 A from a single 3.4V supply respectively and allocate a total area of 3675 /spl times/ 1875 /spl mu/m/sup 2/.

4-bit flash A/D converters have been designed and fabricated in InP-HBT technology. The circuit utilizes a novel distributed ladder structure to create the quantization reference voltages. Based on signal-to-noise-and-distortion measurements, the effective number of bits was calculated as 3.9 bits at 10 GS/S. The circuit consumes about 1.9 A from a single 31 V supply and allocates a total area of 3225/spl times/1875 /spl mu/m/sup 2/.

We introduce a class of two-player cooperation games where each player faces a binary decision, enter or exit. These games have a unique Nash equilibrium of entry. However, entry imposes a large enough negative externality on the other player such that the unique social optimum involves the player with the higher value to entry entering and the other player exiting. When the game is repeated and players' values to entry are private, cooperation admits the form of either taking turns entering or using a cutoff strategy and entering only for high private values of entry. Even with conditions that provide opportunities for unnoticed or non-punishable 'cheating', our empirical analysis including a simple strategy inference technique reveals that the Nash-equilibrium strategy is never the modal choice. In fact, most subjects employ the socially optimal symmetric cutoff strategy. These games capture the nature of cooperation in many economic and social situations such as bidding rings in auctions, competition for market share, labor supply decisions in the face of excess supply, queuing in line and courtship.

Why do firms delegate job design decisions to workers and what are the implications of such delegation? We develop a private-information based theory of delegation where delegation provides a more efficient allocation of talent inside the firm, but at the cost that low ability workers must be compensated to self-sort. Career concerns limit the effectiveness of delegation: when returns to ability or market observability of job content are high, the compensation needed to get low-ability workers to self-sort is high, and firms limit delegation to avoid cream-skimming of the high-ability workers. We investigate implications for how misallocation of talent within firms may occur, the optimal design of incentive contracts, and which decisions are more likely to be delegated to subordinates.

We study all-pay auctions with variable rewards under incomplete information. In standard models, a reward depends on a bidder!s privately known type; however, in our model it is also a function of his bid. We show that in such models there is a potential for paradoxical behavior where a reduction in the rewards or an increase in costs may increase the expected sum of bids or alternatively the expected highest bid

We develop a theory of worker discretion over task choice within a firm. Increasing the workers’ discretion has a trade-off between the gains from workers using private information about their abilities, and the costs from adverse selection within the firm due to workers herding into prestigious tasks. The theory leads to the result that, in line with the Peter Principle, misallocation of talent within firms takes the form of too many workers undertaking tasks with a high return to ability. Moreover we find that the degree of misallocation of talent is decreasing in the degree of discretion given to workers.