Rodrigues-Neto (2009) has shown that a given specification of posteriors of different players in an incomplete-information setting is compatible with a common prior if and only if the posteriors satisfy the so-called cycle equations. This note shows that, if, for any player, any element of the...

The paper provides a speci?cation of belief systems for models of large economies with anonymity in which aggregate states depend only on cross-section distributions of types. For belief systems satisfying certain conditions of mutual absolute continuity, the paper gives a necessary and...

This lecture discusses the 2010 crisis of the European Monetary Union and draws some lessons for reform. Crisis resolution has been difficult because the sovereign debt crisis of countries like Greece and Portugal has come together with real-estate and banking crises in countries like Ireland...

Neeman (2004) and Heifetz and Neeman (2006) have shown that, in auctions with incomplete information about payoffs, full surplus extraction is only possible if agents’ beliefs about other agents are fully informative about their own payoff parameters. They argue that the set of...

We propose a new approach to the normative analysis of public-good provision. In addition to individual incentive compatibility, we impose conditions of robust implementability and coalition proofness. Under these additional conditions, participants' contributions can only depend on the level of...

The paper studies insurance with moral hazard in a system of contingent-claims markets. Insurance buyers are modelled as Cournot monopolists or oligopolists. The other agents condition their expectations on market prices, as in models of rational-expectations equilibrium with asymmetric...

The paper discusses criteria for comparing risk aversion of decision makers when outcomes are multidimensional. A weak concept, ”commodity specific greater risk aversion”, is based on the comparison of risk premia paid in a specified commodity. A stronger concept, ”uniformly greater risk...

We propose a new approach to the normative analysis of public-good provision in a large economy. Our analysis is based on a mechanism design approach that involves a requirement of coalition-proofness, as well as a requirement of robustness, so that the mechanism must not depend on specific...

For an incomplete-information model of public-good provision with interim participation constraints, we show that e¢ cient outcomes can be approximated, with approximately full surplus extraction, when there are many agents and each agent is informationally small. The result holds even if...

The paper reviews and assesses our understanding of the notion of “market discipline” in corporate governance. It questions the wholesale appeal to this notion in policy discussion, which fails to provide an account of the underlying mechanisms in terms of theory and empirical analysis....