When workers are compensated partly in unvested equity, they may leave the firm if they observe low managerial effort, reducing the firm’s value and the manager’s compensation. We call this the worker monitoring channel. Through this channel, unvested worker equity grants can increase managers’ effort incentives, despite diluting the manager’s equity stake. Worker monitoring also links compensation markdowns to managerial incentives, since worker exits are...

Many financial contracts -- futures, options, and swaps -- are written on endogenous prices rather than primitive states of the world. How well can such markets approximate Arrow (1964)'s state-contingent contracts? We develop a tractable equilibrium model in which spot markets allocate goods efficiently but create wealth exposures to equilibrium prices. In our model, futures and variance swaps achieve price-contingent completeness: a planner restricted to...

Automated Market Makers (AMMs) are both liquidity sources and investment vehicles for market participants. This paper analyzes the risks and returns of liquidity provision (LP) investments in AMMs. In a continuous-time model, we show that LP returns decompose into a beta-like component reflecting market risk exposure, and an alpha-like component reflecting microstructural forces: accrued fees minus losses to arbitrageurs. Applying our decomposition to the Uniswap...

A property tax can be thought of as a capital structure, which divides a stream of rents into components accruing to the homeowner and to the government. Near-term rents mainly accrue to homeowners, and far-term rents mainly accrue to governments. This characterization implies that the value of property tax revenues is very sensitive to interest rates, that governments funded by tax revenues have future-biased incentives...

Cryptocurrency exchange market structure is fragmented, since cryptocurrencies are fungible, but customers cannot move freely across cryptocurrency exchanges. We build a model where exchanges with captive customers are linked by arbitrageurs, showing that ``star-shaped'' equilibria can exist, in which arbitrageurs endogenously coordinate on one exchange as a liquidity hub. The model predicts that large exchanges' listing decisions should influence price dispersion, arbitrage flows, trade volumes,...