Economics Insights @ CBS

I construct an intertemporal model in which investors trade shares of a firm. All trading is done through competitive market makers. After the initial period and before the end of the planning horizon, information is asymmetrically distributed among traders, and the prices for investors who buy shares are higher than for those who sell shares. The presence of this deviation from the Walrasian paradigm notwithstanding, dividend policy does not affect the initial period's share price or shareholders' welfare. This result is robust to various extensions of the model.

Federal cutbacks in urban aid in the 1970s forced cities to finance redevelopment projects with their own resources. Freed from federal rules and regulations, cities responded with invention, devising new financial strategies that proved to be powerful alternatives to direct federal aid. The process that fostered the solutions—public-private dealmaking—transformed the nature of city development practice, raising with it troublesome issues of accountability. This article describes these financial strategies and the nature of public subsidies in the deals.

Literature concerning the quality of individual and face-to-face group judgments has generally concluded that both groups and statistically pooled individuals outperform randomly chosen or average individuals. This paper extends previous research by comparing statistically pooled individual judgments of both individuals and face-to-face groups in a stock selection task. In general, decisions that would have resulted from statistically pooled judgments were better (as assessed by future stock value) than those that would have resulted from individual or face-to-face group judgments.