We consider a principal-agent model of adverse selection where, in order to trade with the principal, the agent must undertake a relationship-specific investment which affects his outside option to trade, i.e. the payoff that he can obtain by trading with an alternative principal. This creates a...

We present a model of intergenerational transmission of pro-social values in which parents have information about relevant characteristics of society that is not directly available to their children. Differently from existing models of cultural transmission of values (such as [Bisin and Verdier,...

"A risk-neutral ruler must invest in improving the quality of his country's infrastructures. Higher quality infrastructures increase the profitability of capital investment by foreign entrepreneurs. The ruler wishes to maximize the amount of capital investment that flows into the country. Before...

This article discusses proposed governance reforms of legal services markets. The model distinguishes between a status quo position supported by a system of professionally enforced collective reputation and forms of governance based more squarely on market mechanisms. We identify a number of...

The decision when to provide services by the public sector and when to use the private sector is a fundamental one. The economic literature emphasises that the efficiency of the mechanisms of delivery will depend on the contractual nature of what can be achieved by the parties and the political...