Suppose an entrepreneur needs funds from a financier to invest in a risky project whose cost is fixed, and whose return may be high or low. Suppose also that the project's realized return is an information that is private to the entrepreneur. If the amount the entrepreneur pays back to the...

This paper studies a principal-agent relationship in a contractual crime setting. Suppose an agent and a principal sign a contract stipulating some transfer of funds from one player (say the agent) to the next (the principal) contingent on the state of the world announced by the first player. In...

The regulation of environmental risks increasingly emphasizes the awareness and empowerment of stakeholders. The success of this approach, however, seems to depend crucially on the quality of environmental disclosures. In this paper we investigate the amount and quality of the information that...

The recent automobile liability insurance crisis in Atlantic Canada has prompted the four provincial legislations (Newfoundland and Labrador, New Brunswick, Nova Scotia and Prince Edward Island) to setup a task force to redesign, if necessary, the personal automobile insurance system. After...

This paper characterizes the optimal insurance contract in an environment where an informed agent can misrepresent the state of the world to a principal who cannot credibly commit to an auditing strategy. Because the principal cannot commit, the optimal strategy of the agent is not to tell the...

Local interactions refer to social and economic phenomena where individuals' choices are influenced by the choices of others who are `close' to them socially or geographically. This represents a fairly accurate picture of human experience. Furthermore, since local interactions imply particular...

We offer a definition of iterated elimination of strictly dominated strategies (IESDS) for games with (in)finite players, (non)compact strategy sets, and (dis)continuous payoff functions. IESDS is always a well-defined order independent procedure that can be used to solve Nash equilibrium in...

We consider a differential game between two players, where one player has the first mover advantage. We compare the equilibrium strategy profile of this model with the one generated by a conventional symmetric model. It is shown that the existence of a first mover results in more conservationist...

We present a set of experimental coordination games with a payoff-dominant and a risk-dominant Nash equilibrium. We examine how much local interaction structures affect players' strategy choices. Our three major observations are the following: First, local interaction with open neighborhoods...