This paper endogenizes the internal organization of competitive firms in a simple general equilibrium framework. The options are monitored teams, unmonitored teams motivated by collective performance pay, and self-employment. The choice of incentive scheme depends on market price and also...

This paper investigates the implications of adverse selection for capital market equilibrium when borrowers are risk averse. K. J. Arrow and R. C. Lind (1970) argue that when capital markets fail to spread risk properly interest rates are too high. The market adds a risk premium that the social...

Paying an insurance premium but not needing to claim is sometimes viewed as pouring money down the drain. Aversion to the perceived waste may lead to the rejection of fair insurance. Although policies paying rebates if no claim is made are not attractive to expected utility maximisers, this...

This high-stakes experiment investigates the effect on buyers of mandatory disclosures concerning an insurance policy's value for money (the claims ratio) and the seller's commission. These information disclosures have virtually no effect despite most buyers claiming to value such information....

This experiment shows that varying the commission received by financial advisors strongly influences insurance purchase.

The familiar Chamberlin diagram is shown to be sufficient to determine whether a monopolistically competitive industry over‐supplies or under‐supplies product variety.