Recent empirical work suggests a strong connection between the incentives money managers are offered and their risk … riskiness of the portfolio. This represents a departure from the existing literature on agency theory in that moral hazard is … not only effort exertion but also risk taking behavior. The moral hazard problem with risk taking involves an incentive …

This paper analyses the impact of public disclosure of banks’ risk exposure on banks’ risk taking incentives and its … their loan portfolio, public disclosure reduces the probability of banking crises. When asset risk is driven largely by … between asset risk and the deposit rate demanded by informed depositors. …

In the 'Knightian' theory of entrepreneurship, entrepreneurs provide insurance to workers by paying fixed wages and … bear all the risk of production. This paper endogenizes entrepreneurial risk by allowing for optimal insurance contracts as … increases in risk borne. Thus, even under decreasing risk aversion, there are robust instances in which workers are wealthier …

I study the constrained efficient allocations of a simple model of risk sharing and capital flows across countries … assuming that each country cannot commit to fully repay its contract obligations. In the model, the degree of risk sharing and … the amount of investment are interdependent. It is shown that, when individual rationality constraints are binding, the …

Information asymmetries are important in theory but difficult to identify in practice. We estimate the presence and … explain the prevalence of credit constraints even in a market that specializes in financing high-risk borrowers at very high …

We base a contracting theory for a start-up firm on an agency model with observable but nonverifiable effort, and …