Searching for new ways to use existing ideas is an important aspect of innovation and can involve a great deal of ex ante uncertainty. The paradox is that the outcomes of this search often seem obvious when viewed in hindsight. I examine the degree to which hindsight bias affects the evaluation of obviousness in the patent examination process. If examiners are relying only on ex ante knowledge ...

The empty creditor problem arises when a debtholder has obtained insurance against default but otherwise retains control rights in and outside bankruptcy. We analyze this problem from an ex ante and ex post perspective in a formal model of debt with limited commitment, by comparing contracting outcomes with and without insurance through credit default swaps (CDS). We show that CDS, and the empt...

The article proposes a research program to compare game forms in terms of their ability to govern ex post adjustments to ex ante contracts. The comparisons can be based on direct implementation-costs or the extent to which desirable adjustments are not implemented. In several examples of the program, we compare three game forms: negotiation over each adjustment, ex ante price lists, and implici...

This paper explores in what circumstances patent owners can be expected to join unilaterally a patent pool. We develop a simple model in which owners of patents reading on a standard grant licences to competing manufacturers. Manufacturers must sink a …xed cost to enter the market for standard compliant products, and are thus exposed to a hold up when royalties are set after their entry. We sho...

This paper investigates the effect of different patent regimes on R&D investment and social welfare in a duopoly market with uncertain R&D process. We find that strong patent protection increases R&D investment of at least one firm but whether both firms’ R&D investment will be more under strong patent protection is ambiguous. While ex-ante welfare is more likely to be higher under strong paten...

This paper looks at one particular aspect of the application of concurrency—the analysis of profitability. It warns of the danger that the standards of assessment employed in utility price setting will be carried over from ex ante regulation to settings where it is inappropriate, such as the ex post analysis of competitive markets. Utility regulation profitability standards are inevitably stati...