The paper contrasts early theories of the utility function (starting with Bentham and elaborated by Jevons) with the modern theory (laid down by Fisher and Samuelson).  The former include in the utility function not only the sensation of current events but also the memory of past events and the...

This paper gives a non-fixed point theoretic proof of equilibrium existence when the excess demand function of an exchange economy obeys the weak axiom. The proof is simple and geometrically intuitive, and it also permits a weakening of the continuity assumption on the excess demand function....

The paper presents a model where individuals decide to become workers or entrepreneurs in the presence of capital constraints and where individuals differ in wealth levels.  The model shows that the higher the initial level of inequality in wealth is, the lower the long run aggregate wealth of...

Consider a two period financial economy with incomplete markets and with agents having von Neumann-Morgenstern utility functions. It is well known that when the economy’s endowments are collinear, its excess demand function will obey the weak axiom when certain mild restrictions are...

A common theme in the theory of demand aggregation is that market demand can acquire properties which are not always individually present among the agents who make up that market, a phenomenon we call heterosis in this paper. This paper focusses on the well known result that with a suitable...

In this paper we examine how the quantity of information generated about firm prospects can be improved by splitting a firm’s cash flow into a ‘safe’ claim (debt) and a ‘risky’ claim (equity). The former, being relatively...

Donors who try to impose policy conditionality on countries receiving their aid commonly face confflicting incentives between using aid to induce income-increasing reforms and using aid to assist low-income countries: this confflict can lead to a time-consistency problem. This paper o¤ers a...

This paper shows how to derive a complete set of optimality conditions characterising the solution to a dynamic optimal income tax problem in the spirit of Mirrlees (1971), under the assumption that a 'first-order' approach to incentive compatibility is valid.  The method relies on constructing...

This paper analyses collusion-proof multilateral insurance contracts between a risk neutral insurer and multiple risk averse agents in an environment of asymmetric costly state verification.  Optimal contracts involve the group of agents pooling uncertainty and the insurer acting as reinsurer...

This chapter reviews the literature on the theory of relational incentive contracts.  It motivates the discussion by the classic applications of relational contracts to the GM-Fisher Body relationship and the relationships between Japanese automobile manufacturers and their subcontractors.  It...