We consider a competitive insurance market in which agents can privately enter into multicontractual insurance relationships and undertake hidden actions. We study the existence of linear equilibria when insurance companies do not have any restriction on their pricing rules. We provide...

This paper studies the optimal unemployment insurance for older workers in a repeated principal-agent model, where the search intensity of risk-averse workers (the agents) is not observed by the risk-neutral insurance agency (the principal). When unemployment benefits are the only available...

Early regulator interventions into problem banks are one of the key suggestions of Basel II. However, no guidance is given on their design. To fill this gap, we outline an incentive-based preventive supervision strategy that eliminates bad asset management in banks. Two supervision techniques...

While the media and some professional blogs propose austerity policies because the European debt crisis is due to the misuse of public finances by some national authorities, this paper suggests that the existence of national conflicts within the ECB’s governing bodies is the main cause of the...

The size of adverse selection and moral hazard eects in health insurance markets has important policy implications. For example, if adverse selection eects are small while moral hazard eects are large, conventional remedies for inefficiencies created by adverse selection (e.g., mandatory...

The separate identification of effects due to incentives, selection and preference heterogeneity in insurance markets is the topic of much debate. In this paper, we investigate the presence and variation in moral hazard across health care procedures. The key motivating hypothesis is the...

The Great Recession of 2007-09 has had a devastating and long-lasting effect on the US economy. New Institutional Theories (NIT) of finance contend that part of the explanation for the amplification and duration of economic recessions resides in the presence of asymmetric information and market...

This paper establishes a theoretical model to examine the LOLR policy when a central bank cannot distinguish between solvent and insolvent banks. We study two cases: a case where the central bank cannot screen insolvent banks and a case where the central bank can only imperfectly screen...

Risk classification refers to the use of observable characteristics by insurers to group individuals with similar expected claims, compute the corresponding premiums, and thereby reduce asymmetric information. With perfect risk classification, premiums fully reflect the expected cost associated...

The objective of this text is to develop the theory of social health insurance (SHI; the expression used especially in the United States is "public health insurance," which will be viewed as one variant of SHI here). While a good deal is known about the demand and supply of private insurance,...