This paper characterizes the optimal contract when the agent is endowed with aspirational utility. Our analysis reveals that effort and aspirations act as complements: the principal utilizes aspirational ``boosters'' to induce local risk-loving behavior, reducing the welfare costs of incentives...

This paper develops a general equilibrium model to examine the role of information technology when intermediaries facilitate the origination and distribution of assets given information asymmetry. Information technology measures the informativeness of asset-quality signals received by intermediaries, who purchase assets...

Financial derivatives, such as futures, options, and swaps, are not contracts on exogenous states of the world, as in Arrow (1964): their payoffs depend on the endogenous market prices of certain goods. How well do markets for price risk approximate...

Traditionally, fund managers cast votes on behalf of fund investors. Recently, there is a shift toward "pass-through voting," with funds offering investors a choice: delegate votes to the fund or vote themselves. We develop a framework to study the implications...

We examine the governance implications of passive fund growth. In our model, investors allocate capital between passive funds, active funds, and private savings, and funds' fees and ownership stakes determine their incentives to engage in governance. If passive funds grow...

Blockchain technology holds the promise of transforming our financial system, but a key question lingers regarding whether this technology can ensure secure settlement. We develop an equilibrium model to study that question with regard to the most prominent blockchain type,...