One Security,Many Markets: Determining the Contributions to Price Discovery

When homogeneous or closely-linked securities trade in multiple markets, it is often of interest to determine where price discovery (the incorporation of new information) occurs. This article suggests an econometric approach based on an implicit unobservable efficient price common to all markets. The information share associated with a particular market is defined as the proportional contribution of that market's innovations to the innovation in the common efficient price. Applied to quotes for the thirty Dow stocks, the technique suggests that the preponderance of the price discovery takes place at the New York Stock Exchange (NYSE) (a median 92.7 percent information share).     

Bargaining Effects of the Mandatory-Permissive Distinction

This study uses a laboratory experiment to examine empirically the effect of the mandatory permissive distinction on the negotiation of wages, employment guarantees, and advertising expenditures. Results suggest that negotiators spend more time bargaining over a smaller settlement range when an issue is mandatory than when it is permissive. Further, tentative findings provide no evidence that negotiators can circumvent the distinction through the use of tradeoffs across issues or bargaining power.     

Consumer Perceptions of the Consumer Credit Process

This research contrasts the perceptions of consumers with those of loan officers faced with similar credit application situations. Fundamental misperceptions of the credit granting process are encountered. Consumers clearly misperceive the credit standards of both banks and finance companies. Given large interest rate differentials between loan sources and the narrow shopping scope of most consumers for consumer credit, equitable allocation of credit dollars demands greater appreciation of the nature of the credit evaluation process by lender and borrower.