the resolution of financial distress most models of financial structure embody an assumption about financial distress that causes debt to be costly to the issuing firm this approach has been criticized on the grounds that the assumed costs could be avoided by a costless financial reorganization in this article we show that despite the possibility of costless reorganization it may be rational for firms to incur significant costs in the resolution of financial distress the main assumptions that give rise to our results are the existence of asymmetric courts to impose a reorganization on the claimants of a firm article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

birth order schooling and earnings birth order effects are posited by many to affect earnings and schooling we show how such effects can be interpreted to shift either the earnings possibility frontier for siblings or parental preferences we find empirical evidence for birth order effects on age adjusted schooling and on earnings for young u s adults though the latter is not robust for all specifications the examination of intrahousehold allocations suggests that these birth order differences occur despite parental preferences or prices by birth order favoring later borns apparently because of stronger endowment effects that favor firstborns

twin picks disentangling the determinants of risk taking in household portfolios this paper investigates risk taking in the liquid portfolios held by a large panel of swedish twins we document that the portfolio share invested in risky assets is an increasing and concave function of financial wealth leading to different risk sensitivities across investors human capital which we estimate directly from individual labor income also affects risk taking positively while internal habit and expenditure commitments tend to reduce it our microfindings lend strong support to decreasing relative risk aversion and habit formation preferences furthermore heterogeneous risk sensitivities across investors help reconcile individual preferences with representative agent models

the nature and nurture of economic outcomes this paper uses data on adopted children to examine the relative importance of biology and environment in determining educational and labor market outcomes i employ three long term panel data sets which contain information on adopted children their adoptive parents and their biological parents in at least two of the three data sets the mechanism for assigning children to adoptive parents is fairly random and does not match children to adoptive parents based on health race or ability i find that adoptive parents education and income have a modest impact on child test scores but a large impact on college attendance marital status and earnings in contrast with existing work on iq scores i do not find that the influence of adoptive parents declines with child age this abstract was borrowed from another version of this item

four invalid propositions about equality efficiency and integenerational transfers through schooling four propositions that have been advanced on the basis of verbal intuition are considered they are given precise interpretation in a formal model and then disproved the propositions concern intergenerational transfers through schooling in particular they concern equality efficiency conflicts net benefit calculations and the role of genetic transmission

the design of securities abstract this paper investigates the determinants of security design we consider the assignment of both cash flows and voting rights focusing on corporate control we postulate that a conflict of interest exists between contestants for control and outside investors the conflict arises because private benefits of control give contestants an incentive to acquire control even when this reduces firm value security design is a tool for resolving these conflicts and maximizing firm value our main result is that a single voting security is optimal

a dynamic program for valuing corporate securities abstract we design and implement a dynamic program for valuing corporate securities seen as derivatives on a firm s assets and computing the term structure of yield spreads and default probabilities our setting is flexible for it accommodates an extended balance sheet equality arbitrary corporate debts multiple seniority classes and a reorganization process this flexibility comes at the expense of a minor loss of efficiency the analytical approach proposed in the literature is exchanged here for a quasi analytical approach based on dynamic programming coupled with finite elements to assess our construction which shows flexibility and efficiency we carry out a numerical investigation along with a complete sensitivity analysis

an empirical investigation of u s firms in reorganization the purpose of this paper is to understand the institutional features of chapter 11 from an empirical examination of thirty firms that have emerged from reorganization we find the recontracting framework of chapter 11 to be complex lengthy and costly violations of absolute priority in favor of stockholders are frequently encountered these deviations may result from the bargaining process of chapter 11 or from a recontracting process between creditors and stockholders which recognizes the ability of stockholder oriented management to preserve firm value an example of such recontracting addresses myers underinvestment problem an investigation of the effects of chapter 11 on the pricing of risky debt is also provided the purpose of this paper is to understand the institutional features of chapter

separation hypothesis tests in the agricultural household model in an agricultural household model farmers production decisions can be either separated or nonseparated from preferences since previous studies on agricultural household behavior and policy effects have shown that the model with separation yields different results than the model with nonseparation it is important to have a test to identify the correct model this paper provides new tests that extend current tests in two directions first the new tests avoid issues that current tests have to address such as simultaneity bias and the estimation of the production function second the new tests make use of more information implied from the separation hypothesis than current tests

continuous time methods in finance a review and an assessment i survey and assess the development of continuous time methods in finance during the last 30 years the subperiod 1969 to 1980 saw a dizzying pace of development with seminal ideas in derivatives securities pricing term structure theory asset pricing and optimal consumption and portfolio choices during the period 1981 to 1999 the theory has been extended and modified to better explain empirical regularities in various subfields of finance this latter subperiod has seen significant progress in econometric theory computational and estimation methods to test and implement continuous time models capital market frictions and bargaining issues are being increasingly incorporated in continuous time theory the roots of modern continuous time methods in finance can be traced back to the seminal contributions of merton 1969 1971 1973b in the late 1960s and early 1970s merton 1969 pioneered the use of continuous time modeling in financial economics by formulating the intertemporal consumption and portfolio choice problem of an investor in a stochastic dynamic programming setting merton 1973b also showed how such a framework can be used to develop equilibrium asset pricing implications thereby significantly extending the asset pricing theory to richer dynamic settings and expanding the scope of applications of continuous time methods to study problems in financial economics 1 within a span of about 30 years from the publication of merton s inf luential papers continuous time methods have become an integral part of financial economics indeed in certain core areas in finance such as e g asset pricing derivatives valuation term structure theory and portfolio selection continuoustime methods have proved to be the most attractive way to conduct research and gain economic intuition the continuous time approach in these areas has produced models with a rich variety of testable implications the econometric theory for testing continuous time models has made rapid strides in the last decade and has thus kept pace with the impressive progress on the theoretical front one hopes that the actual empirical investigations and estimation using the new procedures will follow suit soon

adult labour market implications of antisocial behaviour in childhood and adolescence findings from a uk longitudinal study while antisocial behaviour in younger age groups is largely viewed as a public externality issue there are also reasons for expecting less favourable life course outcomes for those individuals who follow antisocial developmental pathways data from a uk longitudinal study of delinquent development in a cohort of working class boys are used to model the adult labour market implications of different antisocial developmental pathways to age 32 a series of probit estimations suggests that children identified as troublesome by peers and teachers at an early age and who subsequently engaged in delinquent behaviour throughout their adolescence had a significantly higher probability of experiencing long periods of time out of the workforce prior to age 32 and lengthy periods of unemployment and or low paid work at both age 18 and at age 32 a heckman selectivity model estimated on weekly earnings at age 32 does not provide evidence that antisocial development in children and adolescents is associated with a l

bankruptcy and agency costs their significance to the theory of optimal capital structure we support and generalize our original results 1978 in light of potential impediments to a pure market solution to agency problems and potential causal links between liquidation and bankruptcy in the case of bankruptcy costs market impediments are easily elimi nated through the inclusion of simple provisions in corporate charters and bond inden tures further we demonstrate that recent attempts to link liquidation costs to capital structure are without merit if the firm is to be liquidated on the basis of a rule other than one that maximizes the total value of all the claimants arbitrage profits arise and informal reorganization will discipline management to follow the liquidation rule that is optimal for existing securityholders also we find that the pure market solution is not readily generalizable to other classes of agency problems particularly the risk incentive problem how ever the alternative solution of the risk incentive problem through complex financing contracting may be useful in explaining complexities in contemporary financial contracts in a previous paper 1978 we employed arbitrage arguments to show that in a well functioning market bankruptcy costs are an insignificant determinant of a firm s capital structure we also pointed out that the decision to liquidate and its associated costs can be separated from the event of bankruptcy moreover any costs actually associated with the event of bankruptcy must be limited to the costs associated with an informal reorganization of the capital structure in the capital market prior to default these results were argued to hold under a com plex environment with multiple periods multiple securities and heterogeneous expectations we concluded that bankruptcy costs would be a significant deter minant of capital structure only in the face of irrationality on the part of market participants or unavoidable impediments to the arbitrage process since the publication of our paper there has been an accumulation of the

the genetics of investment biases abstract for a long list of investment biases including lack of diversification excessive trading and the disposition effect we find that genetic differences explain up to 45 of the remaining variation across individual investors after controlling for observable individual characteristics the evidence is consistent with a view that investment biases are manifestations of innate and evolutionary ancient features of human behavior we find that work experience with finance reduces genetic predispositions to investment biases finally we find that even genetically identical investors who grew up in the same family environment often differ substantially in their investment behaviors due to individual specific experiences or events

unobserved systematic risk factor and default prediction abstract we conduct a thorough analysis on the role played by the unobserved systematic risk factor in default prediction we find that this latent factor outweighs the observed systematic risk factors and can substantially improve the in sample predictive accuracy at the firm rating group and aggregate levels thus it might be helpful to include the unobserved systematic risk factor when simulating portfolio credit losses however we also find that this factor only marginally improves out of sample model performance therefore although the models we investigated all show reasonably good ability to rank order firms by default risk accurate prediction of default rate remains challenging even when the unobserved systematic risk factor is considered

empirical measurement of credit rationing in agriculture a methodological survey empirical analysis of rural credit market failure has been of key scientific and political interest in recent years the aim of this article is to give an overview of the various methods for measuring credit rationing that are employed in the literature furthermore the methods are subjected to a comparative evaluation of their specific strengths or shortcomings six approaches are distinguished measurement of loan transaction costs analysis of qualitative information collected in interviews analysis of quantitative information collected in interviews using the credit limit concept analysis of spill over effects with regard to secondary credit sources econometric household modeling and the econometric analysis of dynamic investment decisions an explicit comparison with a first best solution is impossible in the first three approaches since they essentially rely on a subjective assessment of borrowers access to credit based on qualitative or quantitative indicators the fifth and sixth approaches allow a rigorous interpretation in the framework of neoclassical equilibrium theory the fourth approach takes an intermediate position since spill over on segmented loan markets reveals a willingness to pay with regard to the supposedly less expensive but rationed primary source the approaches are fairly data demanding in general usually requiring specific data on loan transactions even so most approaches are applicable to cross sectional household data with the exception of the first all methods surveyed might plausibly be used to empirically detect credit rationing

human capital heterogeneity and estimated degrees of intergenerational mobility we study the parental investment model of intergenerational mobility where heterogeneity in innate earnings ability and parents altruism rate is explicitly modelled we show that heterogeneity increases the difficulty of detecting the existence of borrowing constrained families conversely the presence of heterogeneity means that economic and linear statistical models of inheritance generate similar intergenerational data on consumption and earnings we also suggest that nay cross country differences in intergenerational earnings mobility are more readily interpreted according to the heterogeneity of inherited ability rather than optimal family responses to countiy specific institutions for accumulating human capital the relationship between a citizen s economic status and his family background is an important clue for understanding and evaluating a country s economic performance some eg bowles 1972 have suggested a close relationship between economic status and family background indicates some failure of labour markets or of institutions fostering investment in human capital others eg altonji et al 1992 mulligan 1997 table 4 1 have offered an apparently contradictory suggestion that efficient allocations involve a very close relationship on some measures between the economic status of parents and children still others find family background effects to be the most offensive sources of inequality regardless of whether those effects are consistent with efficiency empirical studies of this relationship date back to the earliest days of statistical social science eg galton s 1869 british study of the success and eminence of relatives and many can be found outside the field of economics see goode s 1966 survey for a few examples but the increasing availability of new data sets for exploring the relationship between earnings income wealth and consumption of parents and years later of adult children has appropriately led to new and better econometric estimates of intergenerational mobility or the intergenerational auto regression of various measures of economic status and has even permitted some careful comparisons of those estimates across countries however fewer results are available on interpreting such estimates in terms of economic models of inheritance or of the labour market loury 1981 and becker and tomes 1986 are among the exceptions where they show how access to capital markets or other means of

is schooling mostly in the genes nature nurture decomposition using data on relatives we modify r a fisher s model by incorporating measures of the environment that may be correlated across kin groups we estimate a model of schooling attainment using data on eight kin groups and find a large contribution of genetic endowments to the variance in schooling though certain aspects of the environment matter

genetic variation in financial decision making individuals differ in how they construct their investment portfolios yet empirical models of portfolio risk typically account only for a small portion of the cross sectional variance this paper asks whether genetic variation can explain some of these individual differences following a major pension reform swedish adults had to form a portfolio from a large menu of funds we match data on these investment decisions with the swedish twin registry and find that approximately 25 of individual variation in portfolio risk is due to genetic variation we also find that these results extend to several other aspects of financial decision making

excessive continuation and dynamic agency costs of debt abstract this paper analyses the incentives of the equityholders of a leveraged company to shut it down in a continuous time stochastic environment keeping the firm as an ongoing concern has an option value but equity and debt holders value it differently equityholders decisions exhibit excessive continuation and reduce firm s value using a compound exchange option approach we characterise the resulting agency costs of debt derive the price of these costs and analyse their dynamics we also show how agency costs can be reduced by the design of debt

strategic analysis of contingent claims traditional contingent claims analysis provides an elegant and complete model of the financing of the dynamic firm but has difficulty fitting the observations in the market recent work in corporate finance suggests this is because of its failure to model financial distress realistically we survey recent efforts to address this issue by deriving valuation formulae from the analysis of non cooperative equilibria in extensive form games we illustrate how a simple static bankruptcy model can be incorporated in a dynamic game we then show how to find the continuous time equivalent of this game this we use to find closed form bond formulae in special cases and to exploit efficient numerical techniques generally

opportunistic underinvestment in debt renegotiation and capital structure abstract this paper models debt renegotiation as a bargaining game between debtholders and shareholder oriented management in which management credibly threatens to run down firm assets to force concessions from the creditors creditors anticipate this opportunistic behavior by management creating an upper bound on debt capacity that is less than the value of the firm if an advantage to debt is introduced such as favorable tax treatment an interior optimal capital structure obtains even in the absence of realized bankruptcy costs our model also explains variations in debt equity ratios and the use of certain puzzling debt covenants

how large are the effects from changes in family environment a study of korean american adoptees i analyze a new set of data on korean american adoptees who were quasi randomly assigned to adoptive families i find large effects on adoptees education income and health from assignment to parents with more education and from assignment to smaller families parental education and family size are significantly more correlated with adoptee outcomes than are parental income or neighborhood characteristics outcomes such as drinking smoking and the selectivity of college attended are more determined by nurture than is educational attainment using the standard behavioral genetics variance decomposition i find that shared family environment explains 14 percent of the variation in educational attainment 35 percent ofthe variation in college selectivity and 33 percent of the variation in drinking behavior

intergenerational persistence of earnings the role of early and college education recent empirical evidence from the united states indicates a high degree of persistence in earnings across generations designing effective public policies to increase social mobility requires identifying and measuring the major sources of persistence and inequality in earnings we provide a quantitative model of intergenerational human capital transmission that focuses on three sources innate ability early education and college education we find that approximately one half of the intergenerational correlation in earnings is accounted for by parental investment in education in particular early education we show that these results have important implications for education policy

unobservable family and individual contributions to the distributions of income and wealth this paper uses combinations of full brothers half brothers and fathers and sons to measure the effect of common family background on a household s income and wealth while the data are drawn from a nineteenth century population the intraclass correlation for income ranges from 13 to 18 which is similar to that found in modern samples intraclass correlations for wealth are significantly higher 18 35 than are those for income intraclass correlations of half brothers compared to those for full brothers suggest that fathers play a dominant role in the transmission of the common family effect when unobserved background is decomposed into individual and family effects the individual effect dominates the family effect for income while the family effect dominates the individual effect for wealth

inter generational effect of parental time and its policy implications abstract motivated by the empirical fact that parents with more human capital spend more time teaching and taking care of their children we develop and estimate a theoretical model in which altruistic parents pass their human capital on in two ways goods investment and time investment based on the estimated model we quantitatively assess how the two types of investment affect wage inequality and inter generational mobility using the model to study the impacts of a public policy that taxes income to finance public schooling we find significantly different policy effects in our model than in a model where time investment does not respond endogenously to the policy

cash flow shortage as an endogenous bankruptcy reason abstract this paper develops a simple model for a leveraged firm and endogenizes the firm s bankruptcy point by assuming that equity issuance is costly equity issuance costs reflect the difficulties in issuing new equity for firms that are close to financial distress the resulting model captures cash flow shortage as a reason to go bankrupt though the equity value is positive i analyze the optimal bankruptcy point as well as corporate bond prices and yield spreads for various levels of equity issuance costs in order to study the impact of different liquidity constraints finally i discuss the consequences on optimal capital structure

nature or nurture what determines investor behavior abstract using data on identical and fraternal twins complete financial portfolios we decompose the cross sectional variation in investor behavior we find that a genetic factor explains about one third of the variance in stock market participation and asset allocation family environment has an effect on the behavior of young individuals but this effect is not long lasting and disappears as an individual gains experience frequent contact among twins results in similar investment behavior beyond a genetic factor twins who grew up in different environments still display similar investment behavior our interpretation of a genetic component of the decision to invest in the stock market is that there are innate differences in factors affecting effective stock market participation costs we attribute the genetic component of asset allocation the relative amount invested in equities and the portfolio volatility to genetic variation in risk preferences

allocative distortions technical progress and input demand in u s airlines 1970 1984 this paper generalizes a globally concave and flexible cost function to accommodate allocative distortions these distortions are introduced through shadow prices and are specified as functions of regressors that make distortion factors firm input and time specific the estimated model based on a panel of nineteen u s airlines observed during 1970 84 rejects the hypothesis of no allocative distortions increase in costs due to allocative distortions are calculated for each airline over the entire period the rate of technical progress and economies of scale are also estimated based on models with and without allocative distortions copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the economic returns to an mba because mba programs require work experience before admittance prior wages can be exploited to disentangle the return to the degree from unobserved productivity we find that controlling for individual fixed effects generally reduces the estimated returns to an mba particularly for those in top programs however for full time mba students attending schools outside of the top 25 the estimated returns are higher when we control for individual fixed effects we show that there is some evidence that those who take the gmat but do not obtain an mba are stronger in dimensions such as workplace skills that are not easily measured

debt valuation renegotiation and optimal dividend policy the valuation of debt and equity reorganization boundaries and firm s optimal dividend policies are studied in a framework where we model strategic interactions between debt holders and equity holders in a game theoretic setting which can accommodate varying bargaining powers to the two claimants two formulations of reorganization are presented debt equity swaps and strategic debt service resulting from negotiated debt service reductions we study the effects of bond covenants on payout policies and distinguish liquidity induced defaults from strategic defaults we derive optimal equity issuance and payout policies the debt capacity of the firm and the optimal capital structure are characterized

a binomial lattice method for pricing corporate debt and modeling chapter 11 proceedings the pricing of corporate debt is still a challenging and active research area in corporate finance starting with merton 1974 many authors proposed a structural approach in which the value of the assets of the firm is modeled by a stochastic process and all other variables are derived from this basic process these structural models have become more complex over time in order to capture more realistic aspects of bankruptcy proceedings the literature in this area emphasizes closed form solutions that are derived by either partial differential equation methods or analytical pricing techniques however it is not always possible to build a comprehensive model with realistic model features and achieve a closed form solution at the same time in this paper we develop a binomial lattice method that can be used to handle complex structural models such as ones that include chapter 11 proceedings of the u s bankruptcy code although lattice methods have been widely used in the option pricing literature they are relatively new in corporate debt pricing in particular the limited liability requirement of the equity holders needs to be handled carefully in this context our method can be used to solve the leland 1994 model and its extension to the finite maturity case the more complex model of broadie chernov and sundaresan 2005 and others

market imperfections and output loss in the presence of expenditure constraint a generalized shadow price approach in view of widespread capital market imperfections and farmers budget constraints in developing countries an indirect production function ipf is used for a study of 289 indian paddy growers the analysis generalizes the ipf to accommodate the numerous kinds of market imperfections and policy induced distortions that pervade less developed countries agriculture the presence of these distortions in an expenditure constrained situation results in a loss of output defined as the difference between maximal potential output and actual output for the sample of farmers average output loss is found to be in the range of 12

analyst following and count data econometrics abstract this paper reexamines the determinants of the number of analysts following a firm using econometric models based on count distributions we replicate bhushan s 1989 analyst following study to demonstrate the effects of using count data econometrics in lieu of ols in studying phenomena where the dependent variable ranges among nonnegative integers in contrast with the original paper our findings indicate the number of institutional investors is inversely related with analyst following we also provide econometric evidence to support the preferred use of the negative binomial model in estimating cross sectional analyst following regressions

endowments and the allocation of schooling in the family and in the marriage market the twins experiment 03 we show how comparisons between the within twin correlations of human capital outcomes across identical and nonidentical twins can be used to identify the variability in the individual specific component of endowments and the responsiveness of schooling to individual specific endowments in the family and in the marriage market even when schooling is measured with error estimates from two twins samples indicate that 27 42 percent of the variance in log earnings obesity is due to variability in individual specific endowments allocations of schooling reinforce specific endowments and individual specific earnings endowments of men and their wives schooling are negatively associated

resolution of financial distress under chapter 11 abstract we develop a contingent claims model for a firm in financial distress with a formal account for renegotiations under the u s bankruptcy procedure known as chapter 11 shareholders and two classes of creditors senior and junior alternatively propose a reorganization plan subject to a vote the bankruptcy judge can intervene in any renegotiation round to impose a plan the multiple stage bargaining process is solved in a non cooperative game theory setting the calibrated model yields the liquidation rate the duration of chapter 11 and the frequency of deviations from the absolute priority rule which are consistent with empirical evidence

dividends and leverage how to optimally exploit a non renewable investment in this paper we model the situation where a non renewable investment is given for instance a resource reservoir and show how to optimally trade off between dividends and leverage in order to maximize a performance indicator for shareholders up to the bankruptcy time we then study the way market risk the volatility of the market price of the resource impacts the optimal policies and the default risk of the company the moments when the policies are rebalanced are analyzed and we give a measure of the agency costs which appear between the shareholders and the debt holders

returns to field of study versus school quality mba selection on observed and unobserved heterogeneity i introduction given the importance of human capital investment prospective college students and parents must often choose between higher quality and cost and lower quality and cost schools the considerable literature that has examined this trade off identifies not only school quality as a principal driver of postbaccalaureate earnings but also students choice over fields of study 1 despite the attention lavished on school rankings james et al 1989 for example conclude that college experience variables especially major explain more of the variance in earnings than measured family background ability and college characteristics combined 252 2 that is a prospective baccalaureate student can expect strong future earnings not only by attending a highly ranked institution but also by majoring in a highly rewarded field such as engineering the sciences or business at a lesser ranked school surprisingly this important conclusion about the trade off between content and quality has not been generalized to any other postsecondary degree programs such as associate degrees at community colleges or master s of education master s of business administration mba law medical or phd programs the goal of this article is to fill this void in the literature by estimating the returns to both program quality and fields of specialization in the context of graduate education specifically we estimate these returns for the third most commonly earned postsecondary degree the mba morgeson and nahrgang 2008 prior research has estimated a large drop off in returns to an mba beyond the nation s elite programs arcidiacono et al 2008 because of this and because mbas are likely to face significant opportunity costs of moving to attend a more highly ranked program than what may be available locally estimating the tradeoffs between returns to program quality and to fields of specialization is especially important for mbas in the data set used in this study the average mba student had about 6 yr of full time work experience half were married and 27 had children however if family and job ties restrict potential mba students from enrolling in more highly ranked programs might they nonetheless be able to earn high wage premiums by specializing their studies in fields with higher returns our study focuses on mba areas of concentration in response to competitive pressures and consumer demand many business schools have offered the opportunity for students to go beyond the core mba curriculum by tailoring additional coursework toward a particular area 3 in this way mba concentrations mirror the role of undergraduate majors unfortunately to our knowledge no entity such as the association of advance collegiate schools or business aacsb or the graduate management admissions council gmac systematically collects information about the specific courses that constitute areas of concentration by mba program the structure and actual courses included in concentrations within mba programs vary from school to school akin to differences among undergraduate business programs 4 however mba concentrations typically consist of four to five topical courses but range as high as seven or more according to dierdorff and rubin s 2008 survey of 576 of the 621 programs in the united states accredited by the aacsb 5 perhaps the main distinction between undergraduate and mba fields of study is that while most u s undergraduate business programs offer the full array of standard business fields that is general management finance accounting marketing management information systems mis and international business mba areas of concentration despite their increasing prevalence are more selectively offered by schools furthermore the presence of areas of concentration does not appear to be correlated with overall school quality suggesting that the quality of program attended and the choice of focus of study may be two independent drivers of increased earnings among graduates

sequential bargaining with incomplete information this paper describes a simple two person two period bargaining game and solves it using the concept of perfect bayesian equilibrium in which the actions of each player convey information which is used by his opponent the paper examines the effects of changes in bargaining costs the size of the contract zone and the length of the bargaining process on such aspects of the solution as the probability of impasse and the likelihood of concessions the combination of information transfer and the lack of pre commitment embodied in perfectness yields many surprising results common perceptions about the effects of parameter changes on bargaining processes are suspect and should be checked in the particular game being discussed