We develop a Diamond-Dybvig-style model in which a non-bank firm issues tokens backed by its future services. Consumers face uncertain liquidity demand and costly ex-post borrowing. Tokens are partially liquid–they provide liquidity for the firm’s service but not other consumption
goods,...

Banks face a dual mandate of raising low-cost deposits while avoiding liquidity risk. We
propose a novel mechanism whereby banks use portfolio opacity to meet this objective.
Specifically, banks choose opaque portfolios to secure cheap long-term funding while
trading off insolvency and illiquidity....

Banks face a dual mandate of raising cheap deposits while avoiding liquidity risk. We propose a novel mechanism whereby banks use portfolio opacity to meet this objective. Specifically, banks choose opaque portfolios to secure cheap long-term funding while trading off...

While large language models (LLMs) perform well on well-defined tasks, effective
prompts are challenging when tasks depend on users’ soft traits and latent prefer-
ences. We formalize this friction by introducing preference uncertainty—capturing
soft information—into a cheap talk framework (Crawford and Sobel, 1982)...

Firms are increasingly adopting predictive artificial intelligence (AI) to improve decision-making by combining advanced data analysis with managerial judgment. While AI provides more precise information to support managerial decision-making, its adoption can nevertheless reduce shareholder profits and the aggregate welfare,...

What are the consequences of worker private information for corporate governance? When informed workers are compensated partly in equity, they may leave the firm if they observe low managerial effort, reducing the firm value and the manager’s own compensation. Counterintuitively,...