This paper, instead of focusing on agency cost, analyzes the role of risk-sharing under problems of enforceability (default) to explain the optimal determination of capital structure. Optimal contract structure presents equity and debt.

We base a contracting theory for a start-up firm on an agency model with observable but nonverifiable effort, and renegotiable contracts. Two essential restrictions on simple contracts are imposed: the entrepreneur must be given limited liability, and the investor's earnings must not decrease in...

We consider a model in which the principal-agent relation between inside shareholders and the management affects the firm value.We study the effect of financing the project with risky debt in changing the incentive for a risk-neutral shareholder (the principal) to implement the project-value...

It is well known that modern governments are unwilling to use poll taxes because it corresponds to political suicide. Still, poll taxes are allegedly the most efficient form of taxation. Building on Eaton and Rosen (1980) and Peck (1989), the goal of this paper is to show a case where an excise...

This paper deals with the economic and technical impact of the insurance constraint on the optimal insurance contracts. We show that restricting the set of admissible indemnity fucntions to those that do not allow fo indemnities larger than the damage does not invalidate the Pareto-optimality of...

The goal of this study is to develop a tool to aid insurance company adjusters in their decision making and to ensure that they are better equipped to fight fraud.

In this survey we present some of the more significant results in the literature on adverse selection in insurance markets. Sections 1 and 2 introduce the subject and section 3 discusses the monopoly model developed by Stiglitz (1977) for the case of single-period contracts and extended by many...

This paper examines the ways insurance companies modified their investment policies during the interwar years, arguing that this period marked the start of the transition from 'traditional' to 'modern' investment practice.

The aim of this paper if to give some comments on two approximations used to price reinstatements related to excess of loss reinsurance. For the pro rate capita clause, we will study the rate on line method. For the pro rate temporis clause, we will study the use of a trivial approximation. The...

The aim of this short note is to investigate the impact of duplicates in a life insurance portfolio by means of the supermodular order. Most classical results involving the variances are generalized using the stop-less order.