Credible discovery,settlement, and negative expected value suits

We introduce discovery into a model of settlement and negative expected value (NEV) suits under asymmetric information. The option to conduct discovery has several important effects. First, because discovery is cheaper than litigation, it reduces the defendant's incentive to settle under asymmetric information. Second, discovery must be credible. Because discovery is more valuable the greater the uncertainty it resolves, this introduces a credibility constraint on pre‐discovery settlement offers. This can further reduce the probability and size of a defendant's pre‐discovery settlement offer. Lastly, discovery reduces the ability of NEV plaintiffs to use asymmetric information to extract significant settlements from defendants.     

The Wage–Health Insurance Trade‐off and Worker Selection: Evidence From the Medical Expenditure Panel Survey 1997 to 2006

Key provisions within healthcare reform will likely further increase the cost of employer‐sponsored insurance. Theory suggests that workers pay for their health insurance through a wage offset. We investigate this issue using data from the Medical Expenditure Panel Survey. GMM estimates aimed at correcting for endogenous worker mobility reveal evidence of a trade‐off for workers who are offered health insurance as the only fringe benefit. On the other hand, employees in establishments with a more comprehensive set of benefits enjoy higher wages relative to employees in establishments that offer no benefits. Health also affects the wage–health insurance trade‐off.     

When Do Vertical Mergers Create Value?

This paper studies the market reaction to vertical mergers and explores the many rationales for vertical integration proposed in the industrial organization literature. Abnormal returns for vertical merger announcements are positive until the late 1990s, and turn negative afterward. Acquirers suffer most of the losses. We find support for the most fundamental insight in the industrial organization literature, namely, that vertical mergers generate the greatest value when undertaken in imperfectly competitive markets. We find some evidence to support ideas of asset and site specificity, that is, creating value when market exchange is difficult. We do not find support for information‐based or price uncertainty theories.     

Job security and work force adjustment: How different are U.S. and Japanese practices?

The paper compares employment and hours adjustment in Japanese and U.S. manufacturing. In contrast to some previous work, we find that adjustment of total labor input to demand changes is significantly greater in the United States than in Japan; adjustment of employment is significantly greater in the United States, while that of average hours is about the same in the two countries. Although workers in Japan enjoy greater employment stability than do U.S. workers, we find considerable variability in the adjustment patterns across groups within each country. In the United States, most of the adjustment is borne by production workers. In Japan, female workers, in particular, bear a disproportionate share of adjustment.     

Two managerial economics approaches to the R&D decision process

In this paper we present two different approaches that analyze the effects of rivals on the R&D decision process. The first approach assumes that the introduction time of the new product is uncertain to the manager. Given this assumption, the problem is analyzed in a framework similar to the one suggested by Kamien and Schwartz (1972). The second approch assumes technical certainty to study a set of models that extends and supports different views in the managerial economics literature regarding the properties of the R&D decision process from both private and social points of view.