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We analyze labor market models where the law of one price does not hold-that is, models with equilibrium wage dispersion. We begin by assuming workers are ex ante heterogeneous, and highlight a flaw with this approach: if search is costly, the market shuts down. We then assume workers are homogeneous, but matches are ex post heterogeneous. This model is robust to search costs, and it delivers equilibrium wage dispersion. However, we prove the law of two prices holds: generically, we cannot get more than two wages. We explore several other models, including one combining ex ante and ex post heterogeneity, which is robust and can deliver more than two-point wage distributions.

Electronic books. -- local. --- Labor market -- Econometric models. --- Wages -- Econometric models. --- Econometrics --- Labor --- Wages, Compensation, and Labor Costs: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Demand and Supply of Labor: General --- Bargaining Theory --- Matching Theory --- Labour --- income economics --- Econometrics & economic statistics --- Wages --- Unemployment --- Labor markets --- Search models --- Unemployment rate --- Labor market --- Equilibrium --- Economics

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Over-the-counter (OTC) markets for derivatives, collateralized debt obligations, and repurchase agreements played a significant role in the global financial crisis. Rather than being traded through a centralized institution such as a stock exchange, OTC trades are negotiated privately between market participants who may be unaware of prices that are currently available elsewhere in the market. In these relatively opaque markets, investors can be in the dark about the most attractive available terms and who might be offering them. This opaqueness exacerbated the financial crisis, as regulators and market participants were unable to quickly assess the risks and pricing of these instruments. Dark Markets offers a concise introduction to OTC markets by explaining key conceptual issues and modeling techniques, and by providing readers with a foundation for more advanced subjects in this field. Darrell Duffie covers the basic methods for modeling search and random matching in economies with many agents. He gives an overview of asset pricing in OTC markets with symmetric and asymmetric information, showing how information percolates through these markets as investors encounter each other over time. This book also features appendixes containing methodologies supporting the more theory-oriented of the chapters, making this the most self-contained introduction to OTC markets available.

Over-the-counter markets. --- Capital assets pricing model. --- Capital asset pricing model --- CAPM (Capital assets pricing model) --- Pricing model, Capital assets --- OTC markets --- Over-the-counter securities --- Unlisted securities markets --- Capital --- Finance --- Investments --- Securities --- Mathematical models --- Over-the-counter markets --- Capital assets pricing model --- E-books --- Bellman's principle. --- OTC market. --- OTC trades. --- asset pricing. --- credit risk. --- debt. --- derivatives. --- equilibrium bargaining. --- equilibrium search. --- federal funds market. --- federal loans. --- global financial crisis. --- information exchange. --- interbank market. --- intraday allocation. --- large numbers. --- market opaqueness. --- over-the-counter market. --- percolation. --- posterior beliefs. --- private information. --- random matching. --- repurchase. --- search models. --- supply shocks. --- trading. --- transparency.