An important source of value is missing from the conventional welfare analysis of moral hazard, namely, the effect of income transfers (from those who purchase insurance and remain healthy to those who become ill) on purchases of medical care. Income transfers are contained within the price...

Gambling is an ancient economic activity, but despite its universality and importance, no single explanation for the demand for gambles has gained ascendance among economists. This paper suggests that the demand for gambles is based on the ability to obtain "something for nothing." That is, the...