Final goods producers, who may be intrinsically honest (a behavioral type) or opportunistic (strategic), play a repeated game of imperfect information with suppliers of an input of variable (and non-verifiable) quality. Returns to cheating are increasing in the proportion of intrinsically honest...

We study the role of information exchange, leadership and coordination in team or partnership structures. For this purpose, we view individuals jointly engaging in productive processes -- a 'team' -- as endowed with individual and privately held information on the joint production process. Once...

This paper constructs a dynamic model of health insurance to evaluate the short- and long run effects of policies that prevent firms from conditioning wages on health conditions of their workers, and that prevent health insurance companies from charging individuals with adverse health conditions...

We describe research on the impact of health insurance on healthcare spending ("moral hazard"), and use this context to illustrate the value of and important complementarities between different empirical approaches. One common approach is to emphasize a credible research design; we review...

Policy discussions on financial market regulation tend to assume that whenever a corrective policy is used ex post to ameliorate the effects of a crisis, there are negative side effects in terms of moral hazard ex ante. This paper shows that this is not a general theoretical prediction, focusing...

Why do wars occur? We exploit a natural experiment to test the longstanding hypothesis that leaders declare war because they fail to internalize the associated costs. We test this moral hazard theory of conflict by compiling data on the 9,210 children of 3,693 US legislators who served in the...

We develop a theory of optimal financing for R&D-intensive firms that uses their unique features--large capital outlays, long gestation periods, high upside, and low probabilities of R&D success--that explains three prominent stylized facts about these firms: their relatively low use of debt,...