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Food Fights over Free Trade: How International Institutions Promote Agricultural Trade Liberalization
Par Christina L. Davis. 2003
This detailed account of the politics of opening agricultural markets explains how the institutional context of international negotiations alters the…
balance of interests at the domestic level to favor trade liberalization despite opposition from powerful farm groups. Historically, agriculture stands out as a sector in which countries stubbornly defend domestic programs, and agricultural issues have been the most frequent source of trade disputes in the postwar trading system. While much protection remains, agricultural trade negotiations have resulted in substantial concessions as well as negotiation collapses. Food Fights over Free Trade shows that the liberalization that has occurred has been due to the role of international institutions. Christina Davis examines the past thirty years of U.S. agricultural trade negotiations with Japan and Europe based on statistical analysis of an original dataset, case studies, and in-depth interviews with over one hundred negotiators and politicians. She shows how the use of issue linkage and international law in the negotiation structure transforms narrow interest group politics into a more broad-based decision process that considers the larger stakes of the negotiation. Even when U.S. threats and the spiraling budget costs of agricultural protection have failed to bring policy change, the agenda, rules, and procedures of trade negotiations have often provided the necessary leverage to open Japanese and European markets. This book represents a major contribution to understanding the negotiation process, agricultural politics, and the impact of international institutions on domestic politics.Scholars and statesmen have debated the influence of international commerce on war and peace for thousands of years. Over the…
centuries, analysts have generally treated the questions "Does international commerce influence security?" and "Do trade flows influence security?" as synonymous. In Producing Security, Stephen Brooks maintains that such an overarching focus on the security implications of trade once made sense but no longer does. Trade is no longer the primary means of organizing international economic transactions; rather, where and how multinational corporations (MNCs) organize their international production activities is now the key integrating force of global commerce. MNC strategies have changed in a variety of fundamental ways over the past three decades, Brooks argues, resulting in an increased geographic dispersion of production across borders. The author shows that the globalization of production has led to a series of shifts in the global security environment. It has a differential effect on security relations, in part because it does not encompass all countries and industries to the same extent. The book's findings indicate that the geographic dispersion of MNC production acts as a significant force for peace among the great powers. The author concludes that there is no basis for optimism that the globalization of production will promote peace elsewhere in the world. Indeed, he finds that it has a net negative influence on security relations among developing countries.The Quest for Prosperity: How Developing Economies Can Take Off - Updated Edition
Par Justin Yifu Lin. 2015
Justin Yifu Lin's groundbreaking account of how developing countries can help themselves—now fully updatedHow can developing countries grow their economies?…
Most answers to this question center on what the rich world should or shouldn't do for the poor world. In The Quest for Prosperity, Justin Yifu Lin—the first non-Westerner to be chief economist of the World Bank—focuses on what developing nations can do to help themselves. Lin examines how the countries that have succeeded in developing their own economies have actually done it. Interwoven with insights, observations, and stories from Lin’s travels as chief economist of the World Bank and his reflections on China’s rise, this book provides a road map and hope for those countries engaged in their own quest for prosperity.Investors and Markets: Portfolio Choices, Asset Prices, and Investment Advice (Princeton Lectures in Finance #3)
Par William F. Sharpe. 2006
In Investors and Markets, Nobel Prize-winning financial economist William Sharpe shows that investment professionals cannot make good portfolio choices unless…
they understand the determinants of asset prices. But until now asset-price analysis has largely been inaccessible to everyone except PhDs in financial economics. In this book, Sharpe changes that by setting out his state-of-the-art approach to asset pricing in a nonmathematical form that will be comprehensible to a broad range of investment professionals, including investment advisors, money managers, and financial analysts. Bridging the gap between the best financial theory and investment practice, Investors and Markets will help investment professionals make better portfolio choices by being smarter about asset prices. Based on Sharpe's Princeton Lectures in Finance, Investors and Markets presents a method of analyzing asset prices that accounts for the real behavior of investors. Sharpe makes this technique accessible through a new, one-of-a-kind computer program (available for free on his Web site, at http://www.stanford.edu/~wfsharpe/apsim/index.html) that enables users to create virtual markets, setting the starting conditions and then allowing trading until equilibrium is reached and trading stops. Program users can then analyze the final portfolios and asset prices, see expected returns, and measure risk. In addition to popularizing the most sophisticated form of asset-price analysis, Investors and Markets summarizes much of Sharpe's most important previous work and reflects a lifetime of thinking about investing by one of the leading minds in financial economics. Any serious investment professional will benefit from Sharpe's unique insights.Cities of Commerce develops a model of institutional change in European commerce based on urban rivalry. Cities continuously competed with…
each other by adapting commercial, legal, and financial institutions to the evolving needs of merchants. Oscar Gelderblom traces the successive rise of Bruges, Antwerp, and Amsterdam to commercial primacy between 1250 and 1650, showing how dominant cities feared being displaced by challengers while lesser cities sought to keep up by cultivating policies favorable to trade. He argues that it was this competitive urban network that promoted open-access institutions in the Low Countries, and emphasizes the central role played by the urban power holders--the magistrates--in fostering these inclusive institutional arrangements. Gelderblom describes how the city fathers resisted the predatory or reckless actions of their territorial rulers, and how their nonrestrictive approach to commercial life succeeded in attracting merchants from all over Europe. Cities of Commerce intervenes in an important debate on the growth of trade in Europe before the Industrial Revolution. Challenging influential theories that attribute this commercial expansion to the political strength of merchants, this book demonstrates how urban rivalry fostered the creation of open-access institutions in international trade.Beyond Mechanical Markets: Asset Price Swings, Risk, and the Role of the State
Par Roman Frydman, Michael D. Goldberg. 2011
A powerful challenge to contemporary economics and a new agenda for global financeIn the wake of the global financial crisis…
that began in 2007, faith in the rationality of markets has lost ground to a new faith in their irrationality. The problem, Roman Frydman and Michael Goldberg argue, is that both the rational and behavioral theories of the market rest on the same fatal assumption—that markets act mechanically and economic change is fully predictable. In Beyond Mechanical Markets, Frydman and Goldberg show how the failure to abandon this assumption hinders our understanding of how markets work, why price swings help allocate capital to worthy companies, and what role government can and can't play.The financial crisis, Frydman and Goldberg argue, was made more likely, if not inevitable, by contemporary economic theory, yet its core tenets remain unchanged today. In response, the authors show how imperfect knowledge economics, an approach they pioneered, provides a better understanding of markets and the financial crisis. Frydman and Goldberg deliver a withering critique of the widely accepted view that the boom in equity prices that ended in 2007 was a bubble fueled by herd psychology. They argue, instead, that price swings are driven by individuals' ever-imperfect interpretations of the significance of economic fundamentals for future prices and risk. Because swings are at the heart of a dynamic economy, reforms should aim only to curb their excesses.Showing why we are being dangerously led astray by thinking of markets as predictably rational or irrational, Beyond Mechanical Markets presents a powerful challenge to conventional economic wisdom that we can't afford to ignore.States of Credit provides the first comprehensive look at the joint development of representative assemblies and public borrowing in Europe…
during the medieval and early modern eras. In this pioneering book, David Stasavage argues that unique advances in political representation allowed certain European states to gain early and advantageous access to credit, but the emergence of an active form of political representation itself depended on two underlying factors: compact geography and a strong mercantile presence. Stasavage shows that active representative assemblies were more likely to be sustained in geographically small polities. These assemblies, dominated by mercantile groups that lent to governments, were in turn more likely to preserve access to credit. Given these conditions, smaller European city-states, such as Genoa and Cologne, had an advantage over larger territorial states, including France and Castile, because mercantile elites structured political institutions in order to effectively monitor public credit. While creditor oversight of public funds became an asset for city-states in need of finance, Stasavage suggests that the long-run implications were more ambiguous. City-states with the best access to credit often had the most closed and oligarchic systems of representation, hindering their ability to accept new economic innovations. This eventually transformed certain city-states from economic dynamos into rentier republics. Exploring the links between representation and debt in medieval and early modern Europe, States of Credit contributes to broad debates about state formation and Europe's economic rise.The Blame Game: Spin, Bureaucracy, and Self-Preservation in Government
Par Christopher Hood. 2010
The blame game, with its finger-pointing and mutual buck-passing, is a familiar feature of politics and organizational life, and blame…
avoidance pervades government and public organizations at every level. Political and bureaucratic blame games and blame avoidance are more often condemned than analyzed. In The Blame Game, Christopher Hood takes a different approach by showing how blame avoidance shapes the workings of government and public services. Arguing that the blaming phenomenon is not all bad, Hood demonstrates that it can actually help to pin down responsibility, and he examines different kinds of blame avoidance, both positive and negative. Hood traces how the main forms of blame avoidance manifest themselves in presentational and "spin" activity, the architecture of organizations, and the shaping of standard operating routines. He analyzes the scope and limits of blame avoidance, and he considers how it plays out in old and new areas, such as those offered by the digital age of websites and e-mail. Hood assesses the effects of this behavior, from high-level problems of democratic accountability trails going cold to the frustrations of dealing with organizations whose procedures seem to ensure that no one is responsible for anything. Delving into the inner workings of complex institutions, The Blame Game proves how a better understanding of blame avoidance can improve the quality of modern governance, management, and organizational design.Competitive Solutions: The Strategist's Toolkit
Par R. Preston McAfee. 2002
Competitive Solutions is an entertaining and wideranging introduction to successful business methods applied to a variety of real-world situations. Rejecting…
the one-size-fits-all premise that underlies so many guides to business strategy, Preston McAfee develops the intellectual tools and insights needed to confront many marketplace problems. Drawing on his broad experience as a consultant for major U.S. companies, as well as extensive research, McAfee emphasizes cooperation, pricing, litigation, and antitrust as vital to a firm's competitive posture--and focuses more attention on these elements than do most business strategy accounts.McAfee begins by considering strategy as successfully applied by America OnLine, an example that introduces many of the tools discussed in greater depth throughout the book. From here he moves to industry analysis: By examining the context for developing a strategy, he points out uses of positioning and differentiation that enable a firm to weaken price competition and deter rivals from stealing customers. McAfee's exploration of a product's life cycle proves an invaluable guide to positioning new technology in order to maximize the potential for future customers.In the centerpiece of the book, McAfee lays out a how-to manual for cooperation, providing tactics crucial for setting standards, lobbying the government, and fostering industry growth. Writing in a conversational manner, McAfee also addresses such deep topics as organizational design and employee compensation and incentives. More detailed discussions examine antitrust enforcement, which is an increasingly important constraint on strategy, as well as strategies for pricing, bidding, signaling, and bargaining.This book is a fascinating examination of modern business strategy and its application in many different settings. Students of business and economics--as well as executives and managers--will recognize Competitive Solutions as an indispensable resource as well as a definitive vision of the strategic firm: one in which each element of company strategy reinforces the other elements.The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times (The Kauffman Foundation Series on Innovation and Entrepreneurship #10)
Par David S. Landes, Joel Mokyr & William J. Baumol. 2010
A sweeping global history of entrepreneurial innovationWhether hailed as heroes or cast as threats to social order, entrepreneurs—and their innovations—have…
had an enormous influence on the growth and prosperity of nations. The Invention of Enterprise gathers together, for the first time, leading economic historians to explore the entrepreneur's role in society from antiquity to the present. Addressing social and institutional influences from a historical context, each chapter examines entrepreneurship during a particular period and in an important geographic location.The book chronicles the sweeping history of enterprise in Mesopotamia and Neo-Babylon; carries the reader through the Islamic Middle East; offers insights into the entrepreneurial history of China, Japan, and Colonial India; and describes the crucial role of the entrepreneur in innovative activity in Europe and the United States, from the medieval period to today. In considering the critical contributions of entrepreneurship, the authors discuss why entrepreneurial activities are not always productive and may even sabotage prosperity. They examine the institutions and restrictions that have enabled or impeded innovation, and the incentives for the adoption and dissemination of inventions. They also describe the wide variations in global entrepreneurial activity during different historical periods and the similarities in development, as well as entrepreneurship's role in economic growth. The book is filled with past examples and events that provide lessons for promoting and successfully pursuing contemporary entrepreneurship as a means of contributing to the welfare of society.The Invention of Enterprise lays out a definitive picture for all who seek an understanding of innovation's central place in our world.The New Dynamic Public Finance (The Toulouse Lectures in Economics)
Par Narayana R. Kocherlakota. 2010
Optimal tax design attempts to resolve a well-known trade-off: namely, that high taxes are bad insofar as they discourage people…
from working, but good to the degree that, by redistributing wealth, they help insure people against productivity shocks. Until recently, however, economic research on this question either ignored people's uncertainty about their future productivities or imposed strong and unrealistic functional form restrictions on taxes. In response to these problems, the new dynamic public finance was developed to study the design of optimal taxes given only minimal restrictions on the set of possible tax instruments, and on the nature of shocks affecting people in the economy. In this book, Narayana Kocherlakota surveys and discusses this exciting new approach to public finance. An important book for advanced PhD courses in public finance and macroeconomics, The New Dynamic Public Finance provides a formal connection between the problem of dynamic optimal taxation and dynamic principal-agent contracting theory. This connection means that the properties of solutions to principal-agent problems can be used to determine the properties of optimal tax systems. The book shows that such optimal tax systems necessarily involve asset income taxes, which may depend in sophisticated ways on current and past labor incomes. It also addresses the implications of this new approach for qualitative properties of optimal monetary policy, optimal government debt policy, and optimal bequest taxes. In addition, the book describes computational methods for approximate calculation of optimal taxes, and discusses possible paths for future research.Thinking about Leadership
Par Nannerl O. Keohane. 2010
A practical and insightful look at what leaders do, how and why they do it, and the challenges they faceLeadership…
is essential to collective human endeavor, from setting and accomplishing goals for a neighborhood block association, to running a Fortune 500 company, to mobilizing the energies of a nation. Political philosophers have focused largely on how to prevent leaders from abusing their power, yet little attention has been paid to what it actually feels like to hold power, how leaders go about their work, and how they relate to the people they lead. In Thinking about Leadership, Nannerl Keohane draws on her experience as the first woman president of Duke University and former president of Wellesley College, as well as her expertise as a leading political theorist, to deepen our understanding of what leaders do, how and why they do it, and the pitfalls and challenges they face.Keohane engages readers in a series of questions that shed light on every facet of leadership. She considers the traits that make a good leader, including sound judgment, decisiveness, integrity, social skill, and intelligence; the role that gender plays in one's ability to attain and wield power; ethics and morality; the complex relationship between leaders and their followers; and the unique challenges of democratic leadership. Rich with lessons and insights from leaders and political thinkers down through the ages, including Aristotle, Queen Elizabeth I, Franklin D. Roosevelt, and Nelson Mandela, Thinking about Leadership is a must-read for current and future leaders, and for anyone concerned about our prospects for good governance.The New Division of Labor: How Computers Are Creating the Next Job Market
Par Frank Levy, Richard J. Murnane. 2004
As the current recession ends, many workers will not be returning to the jobs they once held--those jobs are gone.…
In The New Division of Labor, Frank Levy and Richard Murnane show how computers are changing the employment landscape and how the right kinds of education can ease the transition to the new job market. The book tells stories of people at work--a high-end financial advisor, a customer service representative, a pair of successful chefs, a cardiologist, an automotive mechanic, the author Victor Hugo, floor traders in a London financial exchange. The authors merge these stories with insights from cognitive science, computer science, and economics to show how computers are enhancing productivity in many jobs even as they eliminate other jobs--both directly and by sending work offshore. At greatest risk are jobs that can be expressed in programmable rules--blue collar, clerical, and similar work that requires moderate skills and used to pay middle-class wages. The loss of these jobs leaves a growing division between those who can and cannot earn a good living in the computerized economy. Left unchecked, the division threatens the nation's democratic institutions. The nation's challenge is to recognize this division and to prepare the population for the high-wage/high-skilled jobs that are rapidly growing in number--jobs involving extensive problem solving and interpersonal communication. Using detailed examples--a second grade classroom, an IBM managerial training program, Cisco Networking Academies--the authors describe how these skills can be taught and how our adjustment to the computerized workplace can begin in earnest.Lawlessness and Economics: Alternative Modes of Governance (The Gorman Lectures in Economics #1)
Par Avinash K. Dixit. 2004
How can property rights be protected and contracts be enforced in countries where the rule of law is ineffective or…
absent? How can firms from advanced market economies do business in such circumstances? In Lawlessness and Economics, Avinash Dixit examines the theory of private institutions that transcend or supplement weak economic governance from the state. In much of the world and through much of history, private mechanisms--such as long-term relationships, arbitration, social networks to disseminate information and norms to impose sanctions, and for-profit enforcement services--have grown up in place of formal, state-governed institutions. Even in countries with strong legal systems, many of these mechanisms continue under the shadow of the law. Numerous case studies and empirical investigations have demonstrated the variety, importance, and merits, and drawbacks of such institutions. This book builds on these studies and constructs a toolkit of theoretical models to analyze them. The models shed new conceptual light on the different modes of governance, and deepen our understanding of the interaction of the alternative institutions with each other and with the government's law. For example, one model explains the limit on the size of social networks and illuminates problems in the transition to more formal legal systems as economies grow beyond this limit. Other models explain why for-profit enforcement is inefficient. The models also help us understand why state law dovetails with some non-state institutions and collides with others. This can help less-developed countries and transition economies devise better processes for the introduction or reform of their formal legal systems.The Terrorist's Dilemma: Managing Violent Covert Organizations
Par Jacob N. Shapiro. 2013
A comprehensive look at how terrorist groups organize themselvesHow do terrorist groups control their members? Do the tools groups use…
to monitor their operatives and enforce discipline create security vulnerabilities that governments can exploit? The Terrorist's Dilemma is the first book to systematically examine the great variation in how terrorist groups are structured. Employing a broad range of agency theory, historical case studies, and terrorists' own internal documents, Jacob Shapiro provocatively discusses the core managerial challenges that terrorists face and illustrates how their political goals interact with the operational environment to push them to organize in particular ways.Shapiro provides a historically informed explanation for why some groups have little hierarchy, while others resemble miniature firms, complete with line charts and written disciplinary codes. Looking at groups in Africa, Asia, Europe, and North America, he highlights how consistent and widespread the terrorist's dilemma--balancing the desire to maintain control with the need for secrecy--has been since the 1880s. Through an analysis of more than a hundred terrorist autobiographies he shows how prevalent bureaucracy has been, and he utilizes a cache of internal documents from al-Qa'ida in Iraq to outline why this deadly group used so much paperwork to handle its people. Tracing the strategic interaction between terrorist leaders and their operatives, Shapiro closes with a series of comparative case studies, indicating that the differences in how groups in the same conflict approach their dilemmas are consistent with an agency theory perspective.The Terrorist's Dilemma demonstrates the management constraints inherent to terrorist groups and sheds light on specific organizational details that can be exploited to more efficiently combat terrorist activity.History Man: The Life of R. G. Collingwood
Par Fred Inglis. 2009
This is the first biography of the last and greatest British idealist philosopher, R. G. Collingwood (1889-1943), a man who…
both thought and lived at full pitch. Best known today for his philosophies of history and art, Collingwood was also a historian, archaeologist, sailor, artist, and musician. A figure of enormous energy and ambition, he took as his subject nothing less than the whole of human endeavor, and he lived in the same way, seeking to experience the complete range of human passion. In this vivid and swiftly paced narrative, Fred Inglis tells the dramatic story of a remarkable life, from Collingwood's happy Lakeland childhood to his successes at Oxford, his archaeological digs as a renowned authority on Roman Britain, his solo sailing adventures in the English Channel, his long struggle with illness, and his sometimes turbulent romantic life. In a manner unheard of today, Collingwood attempted to gather all aspects of human thought into a single theory of practical experience, and he wrote sweeping accounts of history, art, science, politics, metaphysics, and archaeology, as well as a highly regarded autobiography. Above all, he dedicated his life to arguing that history--not science--is the only source of moral and political wisdom and self-knowledge. Linking the intellectual and personal sides of Collingwood's life, and providing a rich history of his milieu, History Man also assesses Collingwood's influence on generations of scholars after his death and the renewed recognition of his importance and interest today.How our stone-age brains made modern society, and why it matters for relationships between men and womenAs countless love songs,…
movies, and self-help books attest, men and women have long sought different things. The result? Seemingly inevitable conflict. Yet we belong to the most cooperative species on the planet. Isn't there a way we can use this capacity to achieve greater harmony and equality between the sexes? In The War of the Sexes, Paul Seabright argues that there is—but first we must understand how the tension between conflict and cooperation developed in our remote evolutionary past, how it shaped the modern world, and how it still holds us back, both at home and at work.Drawing on biology, sociology, anthropology, and economics, Seabright shows that conflict between the sexes is, paradoxically, the product of cooperation. The evolutionary niche—the long dependent childhood—carved out by our ancestors requires the highest level of cooperative talent. But it also gives couples more to fight about. Men and women became experts at influencing one another to achieve their cooperative ends, but also became trapped in strategies of manipulation and deception in pursuit of sex and partnership. In early societies, economic conditions moved the balance of power in favor of men, as they cornered scarce resources for use in the sexual bargain. Today, conditions have changed beyond recognition, yet inequalities between men and women persist, as the brains, talents, and preferences we inherited from our ancestors struggle to deal with the unpredictable forces unleashed by the modern information economy.Men and women today have an unprecedented opportunity to achieve equal power and respect. But we need to understand the mixed inheritance of conflict and cooperation left to us by our primate ancestors if we are finally to escape their legacy.This book reviews and develops Bayesian non-parametric and semi-parametric methods for applications in microeconometrics and quantitative marketing. Most econometric models…
used in microeconomics and marketing applications involve arbitrary distributional assumptions. As more data becomes available, a natural desire to provide methods that relax these assumptions arises. Peter Rossi advocates a Bayesian approach in which specific distributional assumptions are replaced with more flexible distributions based on mixtures of normals. The Bayesian approach can use either a large but fixed number of normal components in the mixture or an infinite number bounded only by the sample size. By using flexible distributional approximations instead of fixed parametric models, the Bayesian approach can reap the advantages of an efficient method that models all of the structure in the data while retaining desirable smoothing properties. Non-Bayesian non-parametric methods often require additional ad hoc rules to avoid "overfitting," in which resulting density approximates are nonsmooth. With proper priors, the Bayesian approach largely avoids overfitting, while retaining flexibility. This book provides methods for assessing informative priors that require only simple data normalizations. The book also applies the mixture of the normals approximation method to a number of important models in microeconometrics and marketing, including the non-parametric and semi-parametric regression models, instrumental variables problems, and models of heterogeneity. In addition, the author has written a free online software package in R, "bayesm," which implements all of the non-parametric models discussed in the book.Lectures on Behavioral Macroeconomics
Par Paul De Grauwe. 2013
In mainstream economics, and particularly in New Keynesian macroeconomics, the booms and busts that characterize capitalism arise because of large…
external shocks. The combination of these shocks and the slow adjustments of wages and prices by rational agents leads to cyclical movements. In this book, Paul De Grauwe argues for a different macroeconomics model--one that works with an internal explanation of the business cycle and factors in agents' limited cognitive abilities. By creating a behavioral model that is not dependent on the prevailing concept of rationality, De Grauwe is better able to explain the fluctuations of economic activity that are an endemic feature of market economies. This new approach illustrates a richer macroeconomic dynamic that provides for a better understanding of fluctuations in output and inflation. De Grauwe shows that the behavioral model is driven by self-fulfilling waves of optimism and pessimism, or animal spirits. Booms and busts in economic activity are therefore natural outcomes of a behavioral model. The author uses this to analyze central issues in monetary policies, such as output stabilization, before extending his investigation into asset markets and more sophisticated forecasting rules. He also examines how well the theoretical predictions of the behavioral model perform when confronted with empirical data. Develops a behavioral macroeconomic model that assumes agents have limited cognitive abilities Shows how booms and busts are characteristic of market economies Explores the larger role of the central bank in the behavioral model Examines the destabilizing aspects of asset marketsInformation and Learning in Markets: The Impact of Market Microstructure
Par Xavier Vives. 2008
The ways financial analysts, traders, and other specialists use information and learn from each other are of fundamental importance to…
understanding how markets work and prices are set. This graduate-level textbook analyzes how markets aggregate information and examines the impacts of specific market arrangements--or microstructure--on the aggregation process and overall performance of financial markets. Xavier Vives bridges the gap between the two primary views of markets--informational efficiency and herding--and uses a coherent game-theoretic framework to bring together the latest results from the rational expectations and herding literatures. Vives emphasizes the consequences of market interaction and social learning for informational and economic efficiency. He looks closely at information aggregation mechanisms, progressing from simple to complex environments: from static to dynamic models; from competitive to strategic agents; and from simple market strategies such as noncontingent orders or quantities to complex ones like price contingent orders or demand schedules. Vives finds that contending theories like informational efficiency and herding build on the same principles of Bayesian decision making and that "irrational" agents are not needed to explain herding behavior, booms, and crashes. As this book shows, the microstructure of a market is the crucial factor in the informational efficiency of prices. Provides the most complete analysis of the ways markets aggregate information Bridges the gap between the rational expectations and herding literatures Includes exercises with solutions Serves both as a graduate textbook and a resource for researchers, including financial analysts