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In our paper, the target of a proposed merger, by setting a reserve price, is able to screen prospective acquirers according to their (expected) ability to generate merger-specific synergies. Both empirical evidence and many merger models suggest that the difference between high and low-synergy mergers becomes smaller during booms. Thus, a target's opportunity cost for sorting out relatively less fitting acquirers increases and, hence, targets screen less tightly during booms, which leads to a hike in merger activity. Our screening mechanism not only predicts that merger activity is intense during booms and subdued during recessions but is also consistent with other stylized facts about takeovers and generates novel testable predictions.

© The Author 2011. Published by Oxford University Press on behalf of The Review of Economic Studies Limited.

The hedonic value of an outcome can be influenced by the alternatives to which it is compared, which is why people expect to be happier with outcomes that maximize comparative value (e.g., the best of several mediocre alternatives) than with outcomes that maximize absolute value (e.g., the worst of several excellent alternatives). The results of five experiments suggest that affective forecasters overestimate the importance of comparative value because forecasters do not realize that comparison requires cognitive resources, and that experiences consume more cognitive resources than do forecasts. In other words, because forecasters overestimate the extent to which they will be able to think about what they didn't get while experiencing what they got.

With permission of Elsevier

I develop a structural demand model for mobile telephony that facilitates the identification of network effects and inter-network compatibility. Network effects are measured as the dependence of consumer willingness to pay on the installed base of subscribers, compatibility as the relative extent of cross- and own-network effects. Estimating the model using quarterly panel data from the Polish mobile telephone market for the period 1996-2001, I find strong network effects and, despite full interconnection of the mobile telephone networks, low compatibility. I also show that ignoring network effects leads to overestimation of demand elasticity.

With permission of Elsevier

We analyze the effect of initial public offerings (IPOs) on industry competitors and provide evidence that companies experience negative stock price reactions to completed IPOs in their industry and positive stock price reactions to their withdrawal. Following a successful IPO in their industry, they show significant deterioration in their operating performance. These results are consistent with the existence of IPOrelated competitive advantages through the loosening of financial constraints, financial intermediary certification, and the presence of knowledge capital. These aspects of competitiveness are significant in explaining the cross-section of underperformance as well as survival probabilities for competing firms.

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