A dynamic model of self insurance and market insurance demand against uncertain natural hazards is developed where agents incur emotional costs when the true information about potential future catastrophes becomes known. Agents purposefully ignore the incoming signals about future hazards in...

This paper models investment/entry decisions in a competitive industry that is subject to a quantity control, either on output or on a production input. The quantity control is implemented via the sale of licenses for the restricted output/input. We show that liberalizing the quantity control...