Organizations & Markets

Micro data studies of household saving often find a significant group in the population with virtually no wealth, raising concerns about heterogeneity in motives for saving. In particular, this heterogeneity has been interpreted as evidence against the life cycle model of saving. This paper argues that a life cycle model can replicate observed patterns in household wealth accumulation after accounting explicitly for precautionary saving and asset-based, means-tested social insurance.

We improve upon existing approaches used to estimate investment models by exploiting tax reforms as "natural experiments." we find that tax policy has an economically important effect through the user cost of capital on firms' equipment investment following major tax reforms enacted in 1962, 1971, 1981, and 1986. This effect is most pronounced for firms not in tax loss positions and, thus, more likely to face statutory tax rates and investment incentives.

A unique dataset collected from the personnel records of a large company is used to study the relationship between on-the-job training and worker productivity. The analysis shows how information contained in a company database is useful for eliminating heterogeneity bias in the estimation of training's impact on wages and job performance.

The purpose of this study was to determine the significance of differences between revised IASC standards (extant in 1994) and U.S. GAAP. With the assistance of Coopers & Lybrand L.L.P., the author restated the group accounts of a sample of eight companies in a variety of industries: six Continental European companies and two companies based in Australia and New Zealand. The companies' annual reports for 1992 or 1993, as supplemented by research conducted by the companies themselves, were used to construct reconciliation tables between the revised IASC standards and U.S. GAAP.

The question of whether lay attributors are biased in their discounting of 1 cause given an alternative cause has not been resolved by decades of research, largely due to the lack of a clear standard for the rational amount of discounting. The authors propose a normative model in which the attributor's causal schemas and discounting inferences are represented in terms of subjective probability.

This paper analyzes how organizations can minimize costs of processing and communicating information. Communication is costly because it takes time for an agent to absorb new information sent by others. Agents can reduce this time by specializingin the processing ofparticular types ofinformation. When these returns to specialization outweigh costsofcommunication, it is efficient for several agents to collaborate within a firm.

Under fairly general conditions, the article derives the equilibrium price schedule determined by the bids and offers in an open limit order book.