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Article
The tragedy of the horizon: A contracting account

The “tragedy of the horizon” captures the gap between long-horizon climate damages and the shorter horizons of corporate decision-making. We provide a contracting account of this idea using a deliberately standard CARA-normal moral-hazard model. Under full commitment, the optimal linear contract can condition on long-horizon outcomes; horizon mi…

Finance Economics
By Christos Cabolis and Karl Schmedders
in Economic Letters
September 2026, vol. 268, 113154, https://doi.org/10.1016/j.econlet.2026.113154
The tragedy of the horizon: A contracting account
By Christos Cabolis and Karl Schmedders
in Economic Letters September 2026, vol. 268, 113154, https://doi.org/10.1016/j.econlet.2026.113154
Summary
The “tragedy of the horizon” captures the gap between long-horizon climate damages and the shorter horizons of corporate decision-making. We provide a contracting account of this idea using a deliberately standard CARA-normal moral-hazard model. Under full commitment, the optimal linear contract can condition on long-horizon outcomes; horizon mi…
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Research Information & Knowledge Hub for additional information on IMD publications

Article
The reset premium: Option value under asymmetric price commitment

We show that a one-sided price-adjustment rule, with free price cuts but a fixed daily reset for price increases, raises the reset price even under risk neutrality, mean-zero wholesale cost shocks, and perfect consumer information. The mechanism is option-theoretic: a higher reset price preserves pass-through in adverse cost states, while favora…

Economics
By Harry J. Paarsch and Karl Schmedders
in Economic Letters
September 2026, vol. 268, 113146, https://doi.org/10.1016/j.econlet.2026.113146
The reset premium: Option value under asymmetric price commitment
By Harry J. Paarsch and Karl Schmedders
in Economic Letters September 2026, vol. 268, 113146, https://doi.org/10.1016/j.econlet.2026.113146
Summary
We show that a one-sided price-adjustment rule, with free price cuts but a fixed daily reset for price increases, raises the reset price even under risk neutrality, mean-zero wholesale cost shocks, and perfect consumer information. The mechanism is option-theoretic: a higher reset price preserves pass-through in adverse cost states, while favora…
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Research Information & Knowledge Hub for additional information on IMD publications

Article
SpaceX is climbing the stack and pulling up the ladder

In February, SpaceX acquired xAI in an all-stock deal valuing the combined business at $1.25 trillion, the largest merger on record. Days earlier it had applied to operate up to 1 million orbital data center satellites. In June it completed the largest IPO in history. Read together, these moves describe a rocket and satellite company absorbing A…

Artificial Intelligence
By Konstantinos Trantopoulos
in Space News.com
24 August 2026
SpaceX is climbing the stack and pulling up the ladder
By Konstantinos Trantopoulos
in Space News.com 24 August 2026
Summary
In February, SpaceX acquired xAI in an all-stock deal valuing the combined business at $1.25 trillion, the largest merger on record. Days earlier it had applied to operate up to 1 million orbital data center satellites. In June it completed the largest IPO in history. Read together, these moves describe a rocket and satellite company absorbing A…
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Research Information & Knowledge Hub for additional information on IMD publications