We examine how the reputation concern of contracting parties affects contractual incentives if information is transmitted to the public through contract litigation. In a career concern framework, the performance of the long-lived seller is revealed to future buyers only if contractual disputes...

Motivated by markets for ''expertise,'' we study a bandit model where a principal chooses between a safe and risky arm. A strategic agent controls the risky arm and privately knows whether its type is high or low. Irrespective of type, the agent wants to maximize duration of experimentation with...

We introduce a class of two-player dynamic games to study the effectiveness of screening in a principal-agent problem. In every period, the principal chooses either to irreversibly stop the game or to continue, and the agent chooses an action if the principal chooses to continue. The agent's...

An entrepreneur contracts with a consultant, who is protected by limited liability, to supply information about the state of a project prior to investing in it. For a given level of investment, a good project succeeds with higher probability than a bad one. The entrepreneur makes an upfront...

Incomplete information is an obstacle to deal-making. Information problems also exist as to ongoing matters in the parties’ relationship. That this is so is well known. But attention has focused largely on a subset of information problems where there is agreement on what the information is and...

The main motivation of this paper is to study the impact of the composition of creditors on the probability of default and the risk premium on sovereign bonds, when there is debtor moral hazard. In the absence of any legal enforcement, relational contracts work only when there are creditors who...

We examine a simple extension to existing credit contacts for the poor (‘microfinance contracts’), that would allow financial institutions to provide repayment insurance to their clients. The proposed contract uses the repeated nature of loans to build credit records that borrowers in good...

We discuss the existence of a pooling equilibrium in a two-period model of an insurance market with asymmetric information. We solve the model numerically. We pay particular attention to the reasons for non-existence in cases where no pooling equilibrium exists. In addition to the phenom- enon...

Reputational risk has become a critical concern for most organizations. Insurers, who rely on trust to generate business, are particularly vulnerable. Maintaining a positive reputation, however, is costly, leading to the potential for moral hazard in the form of choosing a lowercost strategy...

We discuss the existence of a pooling equilibrium in a two-period model <p> of an insurance market with asymmetric information. We solve the model <p> numerically. We pay particular attention to the reasons for non-existence <p> in cases where no pooling equilibrium exists. In addition to the phenom- <p>...</p></p></p></p>