The paper studies insurance with asymmetric information in a system of contingent-claims markets with a finite number of risk averse agents. If the informed trader is a price taker, equilibrium prices disclose his information and, conditional on this information, equilibrium outcomes are...

A model of sovereign debt is analyzed. In this model, renegotiation arises in a natural way. Because information is incomplete, the renegotiation game has many equilibria. The standard contract theory approach suggests that the parties should agree to choose the efficient equilibrium strategies...