The introduction of the euro marks a milestone in the process of European financial market integration. This paper analyzes the implications of the euro for cross-border banking activities. A portfolio model is used which captures the role of banks as providers of informational and of...

This paper analyzes intergenerational redistribution in a 2-period overlapping-generations model of a representative democracy. The model incorporates redistribution between generations and redistribution within generations, allowing for heterogeneous labor productivities in the working...

In a differential information economy with quasi–linear utilities, monetary transfers facilitate the fulfillment of incentive compatibility constraints : the associated ex ante core is generically nonempty. However, we exhibit a well–behaved exchange economy in which this core is empty, even...

In this paper we show that unlike in Bayesian frameworks asymmetric information does matter and can explain differences in common knowledge decisions due to ambiguous character of agents' private information. Agents share a common-but-not-necessarily-additive prior beliefs represented by...

The motivation of this paper comes from repeated games with incomplete information and imperfect monitoring. It concerns the existence, for any payoff function, of a particular equilibrium (called completely revealing) allowing each player to learn the state of nature. We consider thus an...

We identify particular exchange economies with asymmetric information in which the ex ante incentive compatible core is nonempty provided that coalitions can allocate goods by means of random mechanisms. Both the use of random mechanisms and the restriction to a specific class of economies are...

This article models a situation in which a monopolistic insurer evaluates risk better than its customers. The resulting equilibrium allocations are compared to the consequences of the standard adverse selection hypothesis. On the positive side, they exhibit the property that low-risk people are...

We study information transmission between informed experts and an uninformed decision-maker who only takes binary decisions. In the single expert case, we show that information transmission can only be relatively poor. Hence, even sophiscated communication games do not yield equilibria which (ex...

The paper starts with a description of major reforms of EU policy in the network industries. Based on the normative economics of regulation, it then points out generic information and transaction cost problems of regulatory policy making. An appropriate allocation of regulatory competencies may...

An overlapping generations model is set up in this paper to analyze social security policy in a representative democracy with asymmetric information. The model considers not only redistribution between generations but also redistribution within generations according to individual labor incomes....