Petrakis and Xepapadeas (1996) proposed a system of self-financed transfers to expand the number of countries that sign an international environmental agreement. They also suggested a mechanism that detects cheating in those agreements when the emissions of an individual country cannot be...

We examine the coexistence of banks and financial markets, studyinga credit market where the qualities of investment projects are notobservable and the investment decisions of entrepreneurs are not contractible...

We analyze optimal contracts and optimal matching patterns in a simple model of partnershipwhere there is a double-sided moral hazard problem and potential partners differ intheir productivity in two tasks. It is possible for one individual to accomplish both tasks (soleproduction) and there are...

Researchers have incorporated labor or credit market frictions in isolation within simple neoclassical models to open up a role for institutions, inject realism into their models and examine the impact of these distortions on output and employment. We present an overlapping generations model...

Amidst a sharp increase in household debt levels, many countries have substantially reformedtheir consumer bankruptcy regulations. I first classify the mechanisms triggered by current U.S.and European bankruptcy regulations and then evaluate these mechanisms within a hidden actionmodel. I...

The paper offers a new explanation for the widely observed use of redeemable and convertible preferred stock in venture capital finance. Redeemable and convertible preferred stocks can be used to endogenously allocate cash flow and control rights as a function of the state of nature, the...

In entwickelten Volkswirtschaften hat sich die Aktiengesellschaft zur dominierenden Organisationsform privatwirtschaftlicher Unternehmungen durchgesetzt.

Our article integrates the manager’s care in the literature on auditor’s liability. With unobservable efforts, we face a double moral hazard setting. It is well-known that efficient liability rules without punitive damages do not exist under these circumstances. However, we show that the...

This paper deals with a moral hazard problem resulting from a combined hidden action and hidden information situation.

The paper deals with the so called external moral hazard. This problem occurs, when-everinsurance companies bear the repair costs of the insured in the case of a damage. The insurancecoverage results in a decrease of the price elasticity of demand and therefore in higher prices for...