How can a principal (an agent) ensure that an agent (a principal) will work (pay up), ifpayment (work) precedes work (payment)? When a banknote is torn in two, each part is byitself worthless. A principal can pre-commit to payment-on-delivery, by tearing a banknoteand giving the agent the first...

The influence of risk aversion on the decision to become self-employed is a much discussedtopic in the entrepreneurial literature. Conventional wisdom asserts that the role model of anentrepreneur requires to make risky decisions in uncertain environments and hence thatmore risk-averse...