The purpose of this paper is to exmine more formally the problem of optimal design of an employment insurance program and provide some estimates of the potential grains that could result from its adoption.

This paper describes equilibrium in games where the informed players may be overconfident. Motivated by specific moral-hazard, signalling and screening problems, we first assume that the "uninformed" players know that the "informed" players may be mistaken, but that the "informed" players are...