This paper surveys models of markets in which some consumers are "savvy" while others are not.  We discuss when the presence of savvy consumers improves the deals available to non-savvy consumers in the market (the case of search externalities), and when the non-savvy fund generous deals for...

The size of adverse selection and moral hazard effects in health insurance markets has important policy implications.  For example, if adverse selection effects are small while moral hazard effects are large, conventional remedies for inefficiencies created by adverse selection (e.g., mandatory...

This study outlines a new theory linking industrial structure to optimal employment contracts and value reducing risk taking.  Firms hire their executives using optimal contracts derived within a competitive labour market.  To motivate effort firms must use some variable remuneration.  Such...

This paper studies the contracting problem between banks and their bankers, embedded in a competitive labour market for banker talent.  To motivate effort banks must use some variable remuneration.  Such remuneration introduces a risk-shifting problem by creating incentives to inflate early...

This paper investigates the incentives of investors to set up an actively managed fund in an emerging market or asset class. The analysis highlights the role of agency problems between fund managers and investors in determining this entry decision. It is shown that investors may wish to set up a...

We review two proposals for debt forgiveness; the Highly Indebted Poor Country Initiative (HIPC) and the Jubilee 2000 Coalition Initiative (J2K). We then consider the workhorse model of debt forgiveness (Krugman 1988). We show that the workhorse model solution is a sub-optimal contract, where...

Game harmony is a generic game property that can be used to predict cooperation in both generic and well-known normal form games. It describes how harmonious (non-conflictual) or disharmonious (conflictual) the interests of players are, as embodied in the payoffs. Pure coordination games are...

Data from three bargaining games - the Dictator Game, the Ultimatum Game, and the Third-Party Punishment Game - played in 15 societies are presented.  The societies range from US undergraduates to Amazonian, Arctic, and African hunter-gatherers.  Behaviour within the games varies markedly...

We study noncooperative models with two agents and several voluntarily contributed public goods. We focus on interior equilibria in which neither agent is bound by non negativity constraints, establishing the conditions for existence and uniqueness of the equilibrium. While adding-up and...

The standard model of an extensive form game rules out an important phenomenon in situations of strategic interaction: deception. Using examples from the world of ancient Greece and from modern-day Wall Street, we show how the model can be generalized to incorporate this phenomenon. Deception...