In this paper we solve a parametric moral hazard model that incorporates risk and inequity aversion. In the model, the worker's effort is not contractible but the employer can link the worker's compensation to the revenue, a measure probabilistically related to the effort. The model can account...

The free-riding issue is generally considered to be the biggest obstacle in the success of an international environmental agreement. Even without free-riding incentives, however, asymmetric information can pose a potentially significant threat in establishing a cooperative relationship. In this...

In a repeated interaction between a principal and two agents with inter-agents externalities and asymmetric information, we show that optimal decentralization within the organization is limited to the first period and across agents.

This paper aims at establishing a relationship between disparity of information and the probability of speculative attack in explaining the Asian crisis. We apply the general framework of Markov-Switching models to the differential of interest rates (DIR), subsequently in Indonesia and Malaysia....

The free-riding issue is generally considered to be the biggest obstacle in the success of an international environmental agreement. Even without free-riding incentives, however, asymmetric information can pose a potentially significant threat in establishing a cooperative relationship. In this...

There is evidence that tax rates have varied considerably through time. In the postwar years, changes in business taxation in the U.S. have occurred at a pace of approximately every three years. The purpose of this research is to examine the implications of tax risk and persistence on...

I present a simple model that formalizes Kahneman's (1973) ideas and experimental work on attention limitations. In addition, I extend his framework to account for the interaction between attention and memory deficits. In particular, I propose that individuals optimally allocate their divisible,...

People are generally reluctant to accept risk. In particular, people overvalue sure gains, relative to outcomes which are merely probable. At the same time, people are also more willing to accept bets when payoffs involve losses rather than gains. I consider how far adaptive learning can go in...

A contest model is constructed to examine the existence of conference bias in college basketball's Ratings Percentage Index (RPI). Though a general RPI bias has been identified in previous literature, this is the first study to address whether the bias is random or systematic in nature. Within...

This paper examines how the incumbency advantage is related to ideological voting or legislative shirking that causes the incumbents to diverge from the preference of the median voter using aggregate data for the U.S. House of Representatives between 1948 and 2000. I find that a rise in the...