Summary This article reviews the basic theoretical model of risk adjustment (Glazer/McGuire 2000) with a special focus on a coherent presentation of the main results. With adverse selection a regulator pursuing efficiency and solidarity objectives will need a risk adjustment scheme acting on a...

Summary In order to avoid too many tied games after playing the five-minute overtime period, the National Hockey League (NHL) introduced two rule changes in the 1999-2000 season. First, a team that loses in overtime receives one point instead of zero points. Second, the number of skaters in...

Abstract This paper shows that standard methods for estimating log-linearized consumption Euler equations using micro data cannot successfully uncover structural parameters like the coefficient of relative risk aversion from a dataset of simulated consumers behaving exactly according to the...

This paper studies mutual consent social networks in which individuals imperfectly monitor others' network ties and have incomplete information about the benefits of network participation. I introduce the Conjectural Pairwise Stability concept, which generalizes Jackson and Wolinsky's (1996)...

This paper considers the robustness of optimal decisions in a model of monopoly and a model of competitive equilibrium in a securities market. Robustness, defined as payoffs being continuous with respect to perturbations in the underlying model, fails to hold for either model. Decision rules are...

This paper provides a recipe to generate definitions of possibility, which is equivalent to the standard approach of deriving possibility from belief/knowledge. Savage's notion of nonnullity is therefore an example that fits into our framework. The recipe is used to create a new definition of...