Is an economy with adverse selection, moral hazard, or an incomplete set of risk markets "constrained" Pareto efficient? There are two sets of papers addressing this question, one asserting that, under seemingly quite general conditions, the economy is constrained Pareto efficient, the other (to...

In a market with a safe rate and a risky asset that pays a continuous dividend stream depending on a latent state of the economy, several agents make consumption and investment decisions based on public information — prices and dividends — and private signals. We obtain the equilibrium in...

A nudge is a non-coercive paternalistic intervention that attempts to improve choices by manipulating the framing of a decision problem. As any paternalism, it faces the difficulty of determining the appropriate welfare criterion. We propose a welfare-theoretic foundation for nudging similar in...

This paper studies a model of public policy with heterogenous citizens/voters and two public goods: One (roads) is chosen directly by an elected policymaker, and the other (pollution) depends stochastically on the amount of roads. Both a one-country and a two-country version of the model are...

The model of public policy studied in this paper has heterogeneous citizens/voters and two public goods: one (roads) chosen directly by an elected policy-maker, and the other (pollution) stochastically dependent on the amount of roads. Both a one-country and a two-country version of the model...

A nudge is a paternalistic government intervention that attempts to improve choices by changing the framing of a decision problem. We propose a welfare- theoretic foundation for nudging similar in spirit to the classical revealed preference approach, by investigating a model where preferences...

Is an economy with adverse selection, moral hazard, or an incomplete set of risk markets "constrained" Pareto efficient? There are two sets of papers addressing this question, one asserting that, under seemingly quite general conditions, the economy is constrained Pareto efficient, the other (to...

Many facts are learned through the intermediation of individuals with special access to information, such as law enforcement officers, officials with a security clearance, or experts with specific knowledge. This paper considers whether societies can learn about such facts when information is...

When a group of investors with dispersed private information jointly invest in a risky project, how should they divide the project payoff? A typical common stock contract rewards investors in proportion to their initial investment, but does it make the best use of investors' crowd wisdom? By...