Insurance for natural hazards - earthquakes, hurricanes, or pandemics - is rarely comprehensively adopted without intense government intervention, and even then it is often only a minority of properties or businesses that are insured. Efforts to close this insurance gap include the introduction...

Behavioral economics explains the fact that many people do not maximize their payoff by two kinds of social preferences: a positive utility from kindness (e.g. altruism and reciprocity) or a negative utility from selfishness (e.g. guilt aversion or negative social images). This distinction is...

We derive the optimal contract in a model in which the agent's effort is unobservable and his findings are private information. Our focus is on the impact of the agent's wealth constraint. We show that three regions need to be distinguished: if the agent's wealth is above a critical threshold,...