We investigate the role of cooperatives in the allocation of risk across agents that we call workers and holders of capital. We show that, despite the inalienability of human capital (no forced labor) and limited liability on the part of all agents, financial coalitions can implement Pareto...

Over the last few centuries laws have increasingly protected individuals and corporations from liability resulting from bad economic outcomes. This evolution in liability provisions, by many accounts, has significantly influenced both the level and distribution of contemporary economic output as...