Static game-theoretic models of bilateral bargaining assume that the seller knows his valuation for the item that is up for sale; that is, how the seller may determine this quantity is exogenous to these models. In this paper, we develop and analyze a stylized Markov decision process that endogenizes the seller’s computation of his marginal inventory valuation in an infinite horizon revenue man...

Hedge fund managers charge management fees on assets under management (AUM) and incentive fees indexed to the high-water mark (HWM). We study the effects of fees and alpha on managerial dynamic leverage choice and valuation. Our main results are: (i) high-powered incentive fees encourage excessive risk taking, while management fees have the opposite effect; (ii) agency conflicts have significan...

In this paper, we introduce performance-dependent options as the appropriate financial instrument for a company to hedge the risk arising from the obligation to purchase shares as part of a bonus scheme for their executives. We determine the fair price of such options in a multidimensional Black-Scholes model which results in the computation of a multidimensional integral whose dimension equals...

For the successful management of knowledge, knowledge needs to be measured. Without valid measurement, it is hard to manage it effectively. However, intangible characteristic of knowledge makes the knowledge measurement a very challenging task. In this paper, we do not measure knowledge directly, but assess how much knowledge contributes to the business performance. KP methodology developed in ...

Proposition algebra is based on Hoare’s conditional connective, which is a ternary connective comparable to if-then-else and used in the setting of propositional logic. Conditional statements are provided with a simple semantics that is based on evaluation trees and that characterizes so-called free valuation congruence: two conditional statements are free valuation congruent if, and only if, t...