We study parents' demand for insurance and protection in a Beckerian context. Parents derive utility from the household's material living standard and number of children and there is a trade-off between the two. Several important new results emerge. These include ; first, a duality between how...

This paper shows that coordination failure and contractual incompleteness can lead to socially excessive investment. Firms and workers choose investment levels, then enter a stochastic matching process. If investment levels are discrete, and match frictions are low, high-investing workers...

This paper describes a theory of rational emulation and deviance. It assumes that individuals care about relative position (or 'status'), and constructs a model of decision-making in social and economic settings.

We study decision problems where (a) preference parameters are defined to include psychological/moral considerations and (b) there is a feedback effect from chosen actions to preference parameters. In a standard decision problem the chosen action is required to be optimal when the feedback...

We present a dynamic model of jurisdiction formation in a society of identical people. The process is described by a Markov chain that is defined by myopic optimization on the part of the players. We show that the process will converge to a Nash equilibrium club structure. Next, we allow for...

This paper illustrates that an international permit trading system may hurt relatively poor countries by making associated economic activities unaffordable. A model is constructed in which the free market solution is Pareto inefficient as a result of pollution. The introduction of tradable...